Data Flash (New Zealand)
NZ: Food Price index - October 2001
The last piece of domestic data prior to tomorrow's RBNZ MPS and OCR review revealed a 0.2% mom rise in the food price
index in October (the market expectation was for a flat outcome).
The annual rate of food price inflation declined from 7.8% in September to 7.7% in October.
Fruit and vegetable prices fell 2.0% mom. However, this was offset by a further 0.8% mom rise in meat prices and a 0.5%
mom rise in general grocery prices.
Our preliminary forecast for the Q4 CPI is +0.5% qoq (the RBNZ forecast 0.6% qoq in its August MPS). This result would
see the annual rate decline from 2.4% to 1.7%.
We continue to expect a 50bps decline in the RBNZ's OCR at tomorrow's OCR review (70% probability; market pricing 90%
probability), taking the OCR to 4.75%. Given that the global situation remains fluid, we expect the RBNZ will refrain
from making strong statements about the expected outlook for policy settings in the accompanying MPS.
Darren Gibbs, Senior Economist
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