The annual inflation rate of 6.7% for the March 2023 quarter was lower than most expectations.
However, the fall was due to the easing of imported inflation – domestically driven inflation in fact strengthened, wrote Federated Farmers’ General Policy National Manager Nick Clark.
‘There were very different quarterly rates for non-tradable inflation (1.7%) versus tradable inflation (0.7%). Tradable inflation is for goods and services imported or subject to competition from imports, while non-tradable inflation is domestically driven. Various trimmed mean measures for core inflation were between 1.1% and 1.2%, not very different to those for the December quarter.
‘The 6.7% annual inflation rate was driven mainly by food (up 11.3%), housing and household utilities (up 7.1%), and recreation and culture (up 6.9%). None of the major CPI groups declined, although communication rose by only 0.2%.
‘Annual non-tradeable inflation was 6.8% (up from 6.6% for the December quarter) while tradeable inflation was 6.4% (down from 8.2%). Trimmed-mean measures ranged from 5.9% to 6.1%, a little lower and narrower than the December quarter’s range of 6.1% to 6.5%.
‘While headline inflation came in lower than expected, which is great, core underlying inflation is still far too high and hardly budged. It needs to reduce too.’
Image credit: Mikael Blomkvist
