Global inflationary pressures To a significant extent, the recent increase in New Zealand’s consumer price inflation has been driven by global disruptions that have caused sharp price increases for critical commodities and a broad range of imported goods and services. In the decade prior to the pandemic, imported consumer price inflation into New Zealand was either negative or close to zero.
These deflationary or disinflationary ‘tradables’ price pressures – which makes up 40 percent of New Zealand’s CPI basket - acted as an anchor on total headline inflation. Domestically driven consumer price inflation (non-tradables) averaged more than 2 percent per annum over recent years (see figure 3). Downward pressure on prices from global competition and technological progress has, at least for now, abated.