Business leaders expect quicker inflation drop

In its latest Survey of Expectations, the closely watched measure of expected inflation in two-years’ time has dropped to 2%, down from 2.3% in the last quarter.

This figure is significant as annual inflation has been outside the RBNZ’s target band of 1-3% since June 2021.

Expectations for inflation two-years ahead are now below the average seen since 2002, when the bank shifted to a 1 to 3% target range for inflation.

Notably, says Westpac senior economist Satish Ranchhod, this measure has not typically fallen to these sorts of lows except at times when actual inflation has fallen below 2%.