Jarrod Kerr: Kiwibank chief economist on whether inflation is set to go down following recent stats

There's belief from some economists that inflation's peaked, and it's all downhill from here. 

It reached 3 percent in the year to September - up from 2.2 percent the year before.

Kiwibank says the third quarter is traditionally tough, and conditions are likely to improve as the year ends. 

Kiwibank chief economist Jarrod Kerr says he's satisfied domestic prices will now ease. 

"We think inflation, this time next year, will be running at about 1.7, 1.8 percent. So job done for the Reserve Bank."

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Episode Transcript

Speaker 1 (00:00):
Afternoon. Inflation has come in today at three percent, which
puts inflation at the very top of the Reserve Bank's
target range. It was driven by council rates up nearly
nine percent and power prices up more than eleven percent.
Jared Kerr is kew we Bank's chief economist, and with
us Hi, Jared Hi, are you worried about this or
jerik in inflation falls away from here?

Speaker 2 (00:18):
No, we think this is the peak. It's a pretty
tough quarter the third quarter, but things tend to ease
off in the fourth quarter. So we had a bit
of a spike and in food, electricity, council rates, you
know that sort of unwines from here and scratching beneath
the surface. We're quite satisfied that domestic prices are heading

(00:41):
in the right direction. Not much we can do with
the international prices.

Speaker 1 (00:44):
Where do you see it going? I mean I read
somewhere that it might even vote fall below two percent
next year. Do you think that?

Speaker 2 (00:51):
Yeah, that's our forecast. We think inflation this time next
year we'll be running at about one point seven to
one point eight. So job done for the Reserve Bank.
The Reserve Bank really has employed a scorched earth policy
here with domestic prices coming off quite quickly and likely

(01:11):
to fall over next year, So what are.

Speaker 1 (01:14):
You going for another cut in November twenty five?

Speaker 2 (01:16):
Faces points Yeah, I think that's done and dust it.
I think we can almost talk about that in the
past tense. It's what they do from there. If the
economy does not show signs of recovering over summer, then
I think the new Arbenz governor will be more than
willing to drop it to two percent. But we're getting

(01:36):
close to that bottom, which is the key message for
business owners, and we are looking to next year with
some optimism.

Speaker 1 (01:43):
Jared, it's good to talk to you. Thank you mate.
It's Jared Kirky, we Banks, chief Economist. For more from
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