ASB expects March’s Selected Price Indexes to show a clear “US‑Iran war related jump”, with sizeable increases in petrol and diesel and follow‑on rises in airfares.
On ASB’s forecasts, annual CPI is set to lift from 3.1% in Q1 to 4.4% in Q2, above the RBNZ’s own projections. The bank cautions that “the key is whether this tick up in inflation will flow through into more generalised and sustained price rises that could prompt decisive and timely OCR increases by the RBNZ.”
Housing demand likely to cool as rates rise
So far, REINZ housing data remain relatively steady, but ASB expects the house price index to flatten in March before softening later in 2026 as higher mortgage rates and fuel costs bite.
In its separate rate report, ASB stresses that “it’s not a one-way street for mortgage rates over the next year or two, with several opposing forces at play,” but also notes the risks for mortgage rates are now “tilted more towards further increases than cuts”.