NZ household inflation expectations: 3.2% in 2 years (RBNZ survey)
According to an online survey conducted by the Reserve Bank of New Zealand (RBNZ), there has been a surprising and significant increase in Kiwi householders' expectations for future levels of inflation. The survey revealed that New Zealand's two-year inflation expectations for households are projected to rise to 3.2%, compared to the previous estimate of 3.0%.
These expectations are rising even though actual inflation, as measured by the Consumer Price Index, is starting to decrease significantly. In the December quarter, the annual inflation rate stood at 4.7%, down from 5.6% in the previous quarter, although it had reached a peak of 7.3% earlier.
Furthermore, the survey results also indicate a resurgence of mortgage stress among respondents. They were asked to rate their likelihood of missing a mortgage or rent payment in the next three months on a scale of 0 to 100. The average chance of not being able to make a mortgage payment increased from 12.4% in the previous quarter to 17.3% in the current quarter, marking the highest percentage since the June 2022 quarter. Similarly, the average reported chance of missing a rent payment rose from 16.2% to 18.0%.
The RBNZ closely monitors the two-year inflation expectations because it considers this time horizon crucial for the transmission of changes in monetary policy.
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