Most bank economists had been expecting inflation to slip back slightly to 7.1 per cent, though the Reserve Bank of New Zealand had forecast in November that it would hit a fresh high of 7.5 per cent
| New Zealand inflation held near a three-decade high in the fourth quarter, maintaining pressure on the central bank to keep raising interest rates.
The annual inflation rate is lower than the Reserve Bank’s forecast of 7.5 per cent, but its failure to slow suggests further monetary tightening is required to cool demand. The RBNZ in November projected that the Official Cash Rate would need to rise to 5.5 per cent by mid-year from 4.25 per cent now to get inflation back into its 1-3 per cent target band next year.
The RBNZ has been at the forefront of global monetary tightening as central banks battle to overcome inflation stoked by surging energy prices and supply chain disruptions.But weak business confidence, slow consumer spending and signs of waning global inflation pressures have fuelled speculation the central bank may be able to join some of its peers in slowing the pace of rate hikes.
Higher food prices, airfares and stubbornly high house construction costs were largely responsible for keeping inflation running hot.
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