The inflation surge was driven by multiple factors: quicker than anticipated recovery from the COVID19 pandemic, global supply chain bottlenecks exacerbated by renewed China lockdowns and, in the case of energy and food, Russia's illegal war in Ukraine. The ongoing monetary policy normalisation is a response to the dramatically changed inflation outlook. In the United States, the tightening of monetary policy began in March.
Annual house price inflation measured on a three-month moving average basis is currently 10.9 and 7.4 percent in Auckland and Christchurch respectively, and 1.1 percent in the rest of New Zealand. We will have a clearer assessment when the February/March REINZ data is available. 4  Data on inventories, days-to-sell and sales all point to continued price pressures.