Economic Update
CPI inflation in the September 2022 quarter was markedly stronger than expected, with prices rising 2.2% in the quarter and 7.2% in the year to September 2022. While annual tradables inflation fell slightly to 8.1%, annual non-tradables inflation rose to 6.6%, the highest since records began in 1990.
The September quarter labour market release showed the labour market remains very tight. While the unemployment rate was steady at 3.3% (Figure 1), the participation rate rose to 71.7% and quarterly employment growth was 1.3%. Indicators of wage growth were also strong, as average hourly earnings and the labour cost index rose 7.4% and 3.7% in the year respectively.
As widely expected, the RBNZ increased the Official Cash Rate (OCR) by 50 bps to 3.50% at the October Monetary Policy Review. Following the surprisingly strong inflation outturn (later in October), market analysts are now widely expecting a 75 bps hike at the November Monetary Policy Statement. Market pricing of the OCR peak is now higher than 5%, well above the 4.1% peak in the RBNZ’s latest published forecasts in August.
For further up to date economic indicators read the Treasury’s latest Fortnightly Economic Update.
Figure 1: New Zealand Unemployment Rate
Source: Stats NZ
|
