The Reserve Bank of New Zealand's September quarter survey of business managers' expectations has found their two year-ahead expectation for Consumer Price Inflation was 2.6%, which is down from the 2.8% reported in the June quarter.
This will be welcomed by the Reserve Bank, which is focused on keeping inflation between 1 and 3% over the medium term and watches the inflationary expectations of price and wage setters in business very closely.
Any signs that the coming surge in inflation because of the planned GST hike on October 1, an increase in Emissions Trading Scheme costs and higher ACC levies was filtering through into higher expectations of inflation in the longer term would have worried the Reserve Bank.
Governor Alan Bollard warned last week that any signs the one-off increases in prices were being embedded into wage and price setting behaviour would force the bank to take a tougher Monetary Policy stance.
Expectations for inflation one year ahead rose to 3.9% from 2.9% in the June quarter as businesses looked ahead to the coming inflation surge.
See the full detail on the latest RBNZ Survey of Expectations here.
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