Why using New Zealand's inflation report to extrapolate what will happen in Australia is fraught with danger

New Zealand’s December quarter consumer price inflation (CPI) report is about to be released.

If you’re thinking about extrapolating this figure out to what will be seen in Australia’s Q4 CPI report released next Wednesday, this excellent chart from ANZ Bank will provide some food for thought.

Posted on Twitter by Joanne Masters, Senior Economist at ANZ, it shows the quarterly movements in Australian and New Zealand underlying CPI, those reading favoured by both the Reserve Bank’s of Australia and New Zealand.

Source: ANZ Bank

There’s little relationship between the two, underlining why using the New Zealand figure to determine what will be seen in Australia is fraught with danger.

Just because we’re from the same part of the world, have funny accents and are small, trade-exposed economies doesn’t mean that our inflation figures will also be the same.

The New Zealand CPI report will arrive at 8.45am AEDT.

You can follow Joanne on Twitter here.

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