New Zealand Inflation Expected to Rise Above 4% by Mid-Year, Economist Says

On May 15, Westpac Senior Economist Ranchhod stated that the sharp increase in gasoline prices since February indicates that New Zealand's inflation rate will continue on its established path, significantly rising above 4% by mid-year. According to Jin10, Ranchhod noted that the impact of rising fuel prices on other consumer goods prices and the resulting dampening effect on economic activity are clearly evident, though they will take time to fully manifest. He added that this situation places the Reserve Bank of New Zealand in a precarious position. Interest rates will inevitably need to be raised, but the key questions are when to start and at what pace. Westpac anticipates that the Reserve Bank of New Zealand will begin a series of rate hikes starting in September.