Consumers price index
Inflation moderates to 4.7%pa as domestic pressures slowly ease
24 Jan 2024
Our take on the latest Consumers price index (Wed 24 Jan 2024)
Annual inflation moderated to 4.7%pa in December quarter
Domestic inflation edged down to 5.9%pa
Services-based inflation eased to 4.7%pa
The key numbers...
- The Consumers Price Index (CPI) rose 0.5% between the September and December 2023 quarters, the smallest quarterly rise since late 2020, leading to a moderation in the annual inflation rate to 4.7%.
- Non-tradable (domestically based) prices rose 1.1%, which was more than the Reserve Bank’s pick of 0.9%. Nevertheless, this increase still saw non-tradable inflation slow to 5.9%pa after seven consecutive months above 6.0%pa.
- Tradable (overseas based) inflation slowed from 4.7%pa in the September quarter to 3.0%pa. Transport cost inflation eased to 3.3%pa, despite annual growth in petrol prices accelerating to 12%pa.
- Services-based inflation eased to 4.7%pa as the labour market continues to slacken. The latest figure included a sharp rise in health cost inflation, which picked up from 2.8%pa in the September quarter to 3.5%pa. Food price inflation eased to 5.7%pa on the back of lower vegetable prices. Household utility cost inflation decelerated to 4.8%pa.
- Annual rental cost inflation accelerated for a second consecutive quarter to 4.5%pa, confirming the increased demand for housing due to high migration.
- Residential building cost inflation eased from 5.0%pa in September to 3.6%pa in December.
Non-tradable inflation comes down slowly
CPI components, annual % changes
...and our reaction
- Headline inflation slowed in line with market expectations in December. Although inflation is moving in the right direction, December’s result was once again driven by easing tradable inflation, which reflects the slowdown in the global economy, and something over which the Reserve Bank has little influence.
- Non-tradable inflation is still too high for the Reserve Bank to be comfortable yet. Accelerated health and rental cost inflation shows that pockets of pressure remain. Although annual net migration is expected to begin easing this year as demand for labour slows, pressure on housing-related costs could persist for some time.
- Moderation in other key categories such as transport, food, and building, suggests that non-tradable inflation is slowly coming under control. Several interest rate-sensitive areas of spending showed more moderate, and even declining, prices. The number of items falling in price was at its highest in three years.
- Despite some remaining stubbornness in domestic inflation, December’s result has firmed up our view that the Reserve Bank will make no further increases to the official cash rate. Instead, we expect rates to be cut from August, providing that domestic pressures continue to ease. Our full macroeconomic forecasts will be released to clients on Friday 2 February.
Latest updates
Premium
Consumers price index
Fuel price spike sends annual inflation to 4.1%pa
Tue 21 Jul 2026
Quarterly
4.1%pa Annual inflation rises in June 20262.9%pa Inflation excl fuel slowed1.6% Building costs up in June 2026 quarterPremium
Consumers price index
Inflation still high going into fuel price shock
Tue 21 Apr 2026
Quarterly
3.1%pa Annual inflation unchanged in March3.5%pa Non-tradables inflation unchanged since Sep 2025
68% Items increasing by expenditure weightConsumers price index
Inflation breaches the RBNZ upper band
Fri 23 Jan 2026
Quarterly
Inflation up to 3.1%paNon-tradable inflation unchanged at 3.5%pa
OCR expectations and wholesale interest rates likely to increaseConsumers price index
Inflation rises to 3.0%pa, hits top of the Reserve Bank's band
Mon 20 Oct 2025
Quarterly
Prices up 1.0% in September quarterNon-tradable inflation eases to 3.5%paHighest annual electricity inflation since 1989