Higher food prices and housing costs are expected to underpin a 0.8% rise in the consumer price index (CPI) for the three months ending September. The index is the official measure of inflation.
Annual inflation is expected to fall slightly to 5.1% from 5.3% in June. The Reserve Bank aims to keep inflation between 1% and 3%.
ASB chief economist Nick Tuffley said inflation was expected to fall from the current high level in coming years as the GST increase implemented last October dropped out of the annual rate.
There had been little in the way of inflation developments since the Reserve Bank's monetary policy statement that would have materially changed the central bank's forecast, he said.
Westpac chief economist Dominick Stephens said he suspected the index would have little influence on the tone of the OCR review, which would focus more on global uncertainties.
"The high headline inflation rate won't rattle the Reserve Bank. Its core inflation sat at 2.3% in June, though that may rise in September." The Reserve Bank believed inflation expectations would moderate once the spike in annual inflation passed, he said.
That belief would not be tested until next year when the GST increase, which added about 2% to annual inflation, dropped out, he said.
Effects of the quakes might show in some details, but these might not be sufficiently large to show at aggregate level.
Building materials were the most likely product to be affected. Global forces had already been pushing prices for these higher over the last year.
Rents had increased slightly faster in the last two quarters, with a quake-induced shortage of rental properties in Christchurch and an emerging housing shortage elsewhere, Mr Stephens said.
Some councils had announced large rates increases for the next year, citing higher insurance costs. However, the average increase looked comparable to previous years.
Dwelling insurance had a weight of just 0.2% in the index, so even a 50% hike in premiums, as some had suggested, would only add 0.1% to inflation, possibly spread over several quarters.
Predictions
• Quarterly inflation to be 0.8%.
• Annual inflation to be 5.1%.
• Christchurch earthquakes to have little effect.
• OCR to remain at 2.5% until March.
