New Zealand inflation forecast jumps to 3.6% as costs surge in 2024
New forecasts suggest inflation in New Zealand will climb higher than previously expected. ANZ Bank now predicts a peak of 3.6% in the third quarter of 2024, while other economists warn the figure could go even higher. The updated projections come as rising costs for travel, food, and energy put pressure on household budgets.
ANZ released its revised forecast on 17 July 2024, at a time when Brent crude oil was trading near $82 per barrel. The bank expects inflation to hit 3.6% in Q3 before easing, though it has kept its official cash rate predictions unchanged. Meanwhile, BNZ has also adjusted its numbers, lifting its Q1 inflation estimate to 2.9% and Q2 to 3.6%.
Prices for everyday goods and services continue to rise. Domestic airfares have jumped 12.8% since January and over 10% compared to last year. Food costs are up 4.5% annually, while electricity and alcohol-tobacco prices have also ticked higher in recent months.
Economist Gareth Kiernan argues ANZ's 3.6% projection may still be too optimistic. He believes inflation will stay stubbornly high, making it difficult for the Reserve Bank to reach its 2% target. Westpac shares a similar view, expecting inflation to remain above 3% until at least the end of the year.
Finance Minister Nicola Willis has described 3.7% inflation as a 'worst-case scenario'—one that could unfold if tensions in Iran escalate further.
The latest forecasts point to prolonged inflationary pressures, with key costs like travel and food driving the increase. While ANZ maintains its cash rate outlook, other economists see a tougher path ahead for bringing inflation down. Households and policymakers will be watching closely as the year progresses.
