RBNZ Q2 Sectoral Factor Model Inflation climbs by 4.8% YoY, Kiwi stays below 0.6200

The Reserve Bank of New Zealand (RBNZ) released its Sectoral Factor Model Inflation gauge for the second quarter of 2022 this Monday.

The gauge accelerated to 4.8% YoY in Q2 2022 vs. 4.6% seen in Q1 (revised sharply higher from 4.2%).

In early Asia, New Zealand’s Consumer Price Index (CPI) rose 1.7% QoQ in the second quarter, beating expectations of a 1.5% increase. Meanwhile, the annualized inflation surged to a 32-year high of 7.3% vs. 7.1% expected.

FX Implications

The Kiwi dollar is little moved on the RBNZ inflation gauge, as NZD/USD is consolidating the latest rally triggered by the above forecast Q2 CPI release.

At the time of writing, the kiwi is trading at 0.6188, up 0.49% on the day.

About the RBNZ Sectoral Factor Model Inflation

The Reserve Bank of New Zealand has a set of models that produce core inflation estimates. The sectoral factor model estimates a measure of core inflation based on co-movements - the extent to which individual price series move together. It takes a sectoral approach, estimating core inflation based on two sets of prices: prices of tradable items, which are either imported or exposed to international competition, and prices of non-tradable items, which are those produced domestically and not facing competition from imports.

NZD/USD Technical levels to watch