New Zealand CPI response: ASB forecast first RBNZ rate cut in February 2025, from Nov 2024

ASB response to the data earlier:

That post highlights very strong non-tradeable inflation. Services inflation also remains sticky high.

The RBNZ are likely to continue to hold higher for longer, as indeed ASB expect.


“Tradable” and “Non-tradable” inflation are terms used to describe different aspects of inflation based on the nature of the goods and services involved.

  1. Tradable Inflation:

    • Definition: Tradable inflation refers to inflation in goods and services that are traded internationally.
    • Examples: Commodities like oil, metals, agricultural products, and manufactured goods like electronics and automobiles.
    • Characteristics: Prices of tradable goods are often influenced by global market conditions, exchange rates, and international supply and demand dynamics. For instance, if the price of oil increases globally, it will lead to tradable inflation in countries that import oil.
    • Impact: The inflation of tradable goods can be significant for countries that rely heavily on imports or exports. Changes in exchange rates can also have a substantial impact on tradable inflation.
  2. Non-tradable Inflation:

    • Definition: Non-tradable inflation refers to inflation in goods and services that are not internationally traded.
    • Examples: Services like healthcare, education, and local utilities, as well as goods with high transportation costs relative to their value, or those that are typically consumed where they are produced.
    • Characteristics: Prices of non-tradable goods and services are primarily influenced by domestic factors such as local wage levels, property rents, and domestic policies. These prices tend to be more stable compared to tradable goods, but can vary significantly from country to country.
    • Impact: Non-tradable inflation is more directly controlled by domestic monetary and fiscal policies. It is less subject to external shocks but can be influenced by domestic factors like labor market conditions and local regulatory changes.

In summary, tradable inflation is primarily driven by international factors and market conditions, whereas non-tradable inflation is driven by domestic economic conditions and policies.

Cool pic via Stuff in New Zealand.

This article was written by Eamonn Sheridan at Source