Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ firms lift 2-year inflation expectations

NZ firms lift 2-year inflation expectations, some signs of life in wage growth

By Rebecca Howard

Feb. 14 (BusinessDesk) - New Zealand firms lifted their two-year inflation expectations and growth forecasts, pushing up the kiwi dollar by pointing to inflationary pressures emerging after a long hiatus.

The Reserve Bank's latest survey of expectations showed respondents see annual inflation at 1.86 percent in one year versus the 1.87 percent rate in the prior survey three months ago. Two-year expectations are seen at 2.11 percent up from 2.02 percent. The New Zealand dollar rose to 73.07 US cents from 72.72 US cents just prior to the release.

The central bank is mandated with keeping annual consumer price inflation between 1 percent and 3 percent over the medium term, with a focus on the midpoint. Annual inflation was running at 1.6 percent in the fourth quarter.

Acting Reserve Bank governor Grant Spencer kept the official cash rate at 1.75 percent in the February review and continued to signal rates won't lift until the latter half of next year at the earliest due to the lack of inflationary pressure. The central bank, however, keeps a close watch on inflation expectations as they have an impact on wage and price setting behaviour.

While fourth-quarter jobs continued to show an influx of workers was keeping a lid on wage inflation - with the unemployment rate at 4.5 percent - today's survey pointed to growing expectations for higher wages.

Annual hourly wage growth for one year ahead is seen at 2.48 percent versus 2.25 percent in the prior survey and increases to 2.68 percent in two years from 2.57 percent. The jobless rate is seen at 4.55 percent in one year, down from a prior view of 4.66 percent.

Firms lifted their expectations for economic growth on an annual real gross domestic product basis to 2.75 percent for the year ahead from 2.65 percent and to 2.52 percent from 2.45 percent for two years ahead.

The New Zealand dollar is expected to be at 72 US cents by the end of June, up from 70 in the prior survey. However, it is expected to fall to 70 by December this year.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Climate Summary: NZ’s Equal-2nd Warmest Year On Record

Annual temperatures were above average (+0.51°C to +1.20°C above the annual average) across the majority of New Zealand... 2018 was the equal 2nd-warmest year on record for New Zealand, based on NIWA’s seven-station series which began in 1909. More>>

ALSO:

GDP: Economic Growth Dampens In The September Quarter

Gross domestic product (GDP) rose 0.3 percent in the September 2018 quarter, down from 1.0 percent in the previous quarter, Stats NZ said today... GDP per capita was flat in the September 2018 quarter, following an increase of 0.5 percent in the June 2018 quarter. More>>

ALSO:

Up $1.20: $17.70 Minimum Wage For 2019

Coalition Government signals how it will move toward its goal of a $20 p/h minimum wage by 2021... “Today we are announcing that the minimum wage will increase to $17.70 an hour on 1 April 2019." More>>

ALSO:

Retail: IKEA To Open In New Zealand

Inter IKEA Systems B.V. is today announcing its intentions to grant the Ingka Group exclusive rights to explore expansion opportunities in New Zealand. More>>