The global oversupply of commodities and manufactured goods, and the high level of excess capacity in the advanced economies, have kept cost and price pressures among our trading partners contained. 3 The steady appreciation in New Zealand’s real effective exchange rate since 2011 (until recently) has been a major factor behind periods of negative tradables inflation over the past three years.
And, more recently, the 52 percent decline in oil prices since June 2014 (figure 2) resulted in negative quarterly inflation in the December 2014 and March 2015 quarters. Figure 2: Oil and the domestic petrol price  Source: Reuters, Ministry of Business, Innovation, and Employment  Non-tradables inflation has been relatively low and stable, averaging around 2.5 percent since the beginning of 2012.