NZ Economic Recovery Faces Fresh Inflation Threats

New Zealand's economic recovery is proving to be uneven and vulnerable to upside inflation risks. According to ANZ Bank's latest quarterly economic outlook, a tentative recovery remains on track but is unlikely to be smooth or evenly felt across households and businesses.

Since its last update in May, ANZ highlighted a notable improvement in confidence from the lows reached during the early days of the global oil price shock. This improved confidence has contributed to a continued economic expansion, with the bank noting that consumer spending remains strong.

However, the uneven pace of recovery and increasing vulnerability to inflation risks are major concerns for policymakers and businesses alike. ANZ warns that upside inflation risks have increased, which could put pressure on interest rates and potentially slow down the economy.