Expert hopeful inflation will fall as new figures to be released

The latest Consumer Price Index (CPI) figures are being released today and some experts are predicting a slight drop in inflation rates.

Speaking to Breakfast this morning, Devon Funds' Greg Smith said inflation in other countries is trending down which is a positive sign.

"We're hoping it's going down, of course it shot up during the pandemic and of course also as a result of the war in the Ukraine it hit a 32-year high in the June quarter, so 7.3% and it was 7.2% in the September quarter.

"The hope is that it's come in below that and that it's tracking in the right direction, of course very relevant to cost of living pressures everyone's experiencing, also related to interest rates.

"So a number around 7.1% would be great and would show it's hopefully heading in the right direction."

Smith said people are feeling the financial pressures in a number of ways, including at the supermarket and the petrol pumps.

"There's a few reasons to believe it might be coming down, we've seen oil prices, they shot up hugely following the war in Ukraine, they've been coming down a bit, it's around $80 a barrel.

"Also shipping costs and freight costs, supply chains are freeing up and that might actually get better with China reopening as well so that's a positive."

He also said the New Zealand dollar has "firmed" which means people are getting "more bang for their buck".

"I think we've gone from about 56 cents against the US dollar, for example we're above 60 cents now so that's going to help levels of import inflation."

Smith said an important aspect of today's figures will be food prices.

"There was a release last week showing that food price inflation came in at a 32-year high, 11%, and a big driver there was what we're paying for groceries so that will be potentially a bit of a fly in the ointment for this number."

The main driver for the 7.2% annual inflation to the September 2022 quarter was housing and household utilities due to rising prices for construction, rentals for housing, and local authority rates, Stats NZ said.

In September last year the Reserve Bank also lifted the official cash rate to 3.5%.

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CPI rose 2.2% in the September quarter.

Vegetable prices rose 24% in the last quarter, petrol prices went up 19% in the past year, while diesel was up 72%.