The New Zealand Dollar (NZD) remained relatively unaffected by the latest inflation data released by the Reserve Bank of New Zealand (RBNZ) for the first quarter of 2025. According to the RBNZ’s Sectoral Factor Model Inflation gauge, inflation has slowed to 2.9% year-over-year (YoY) in Q1 2025, down from 3.1% in Q4 2024. This reading marks a further dip in inflation, which the RBNZ closely monitors, as it aims to maintain inflation within a target range of 1% to 3%.
Despite this lower-than-expected inflation figure, the Kiwi Dollar showed limited movement. At the time of writing, NZD/USD was down 0.19%, trading at 0.5921.
The RBNZ’s Sectoral Factor Model, which provides a measure of core inflation, uses a sectoral approach to assess inflation trends. It analyzes the co-movements of prices in two key categories: tradable items (those influenced by international competition, such as imports) and non-tradable items (locally produced goods not facing external competition). This model helps the RBNZ gain a clearer picture of underlying inflation pressures within New Zealand’s economy.
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