Inflation will be the name of the game next week as the financial markets prepare for Thursday's release of the Consumer Price Index for the March quarter.
Market expectations are for a 0.6 per cent increase in the CPI, which would bring the annual inflation rate to 1.7 per cent, down from 1.8 per cent in calendar 2011.
At that level, the CPI would still be well within the Reserve Bank's 1 to 3 per cent target range, and would therefore be unlikely to stir any change in its current monetary policy stance.
ASB economists expect a 0.6 per cent gain in the index for the quarter, and for annual inflation to sink to bottom of the target band over 2012.
For the March quarter, ASB said a 14.5 per cent hike in tobacco excise tax on New Year's Day was likely to be the main reason for the gain quarterly gain.
Other factors included a lift in fuel prices, food prices, higher insurance premiums and increased rents, ASB said.
The previous quarter's CPI result - a 0.3 per cent contraction - was surprisingly weak, so there was potential for a slightly stronger outcome this time around.
"Nonetheless, all indicators suggest that underlying inflation pressures remain subdued, and there is still little for the Reserve Bank to be concerned about,'' ASB said.
ASB expects inflation to be tame over 2012 as a result of a buoyant New Zealand dollar before rebounding in 2013.
By itself, the CPI release is unlikely to add much to the debate over fixed versus floating rate mortgages, because inflation is likely to remain subdued for some time to come, Shamubeel Eaqub, principal economist at the independent NZ Institute of Economic Research, said.
"My feeling is that the yield curve is positive - with longer dated borrowing costs being higher than shorter term borrowing costs - which means on average that you are probably better off floating than fixing,'' he told APNZ.
Some commercial banks have taken a more pessimistic few of the inflation outlook, and have suggested fixing over floating.
In Australia, floating rate mortgages have historically been the preferred the floating rate option.
On Monday, Statistics New Zealand will release its food price index for March.
Diligent Board Member Services - one of the share market's strongest performers over the last 12 months - will hold is annual meeting on Tuesday.
The company, which makes software that allows executives and directors to manage board documents online, serves several Fortune 500 companies.
Diligent's shares, which last traded at $3.49, have more than tripled in value over the last 12 months.
Offshore, the US quarterly reporting season will get into full swing. US corporate earnings will be an important indicator for US growth and for international market sentiment.
TO RECAP THIS WEEK'S NEWS
- While inflation is unlikely to trouble Reserve Bank Governor Alan Bollard in the immediate future, there is little doubt that the trend in property will give the bank cause for concern.
Both Bollard and his predecessor Don Brash frequently complained about New Zealanders' love affair with property, and the asset bubbles they help create, so the news that Auckland house values have soared past the 2007 peak will not have gone down well with the governor
- Elsewhere in the week, the ANZ launched its "Truckometer'' index.' Developed by Sharon Zollner, a senior economist at ANZ National Bank, the index is derived from traffic volumes monitored and collected by the NZ Transport Agency.
- The New Zealand Institute of Economic Research's quarterly survey of business opinion showed the economy moving sideways. Firms' view of the general business situation has recovered half the ground lost in the December survey's slump.
- Clothing retailer Postie Plus said it was looking at a capital raising this year to help fund an expansion plan. Christchurch-based, Postie Plus said it had reached an agreement to sell its 18-site chain of Babycity stores, from which it expects to raise $4.5m to $5m.
- Shareholders in listed engineering consultants Opus International voted in favour of a 12 per cent increase in directors' fees at yesterday's annual meeting.
Chairman Kerry McDonald said Opus was actively exploring opportunities for collaboration with its 61 per cent owner, Malaysia's Opus Group Bhd. Opus NZ expects 2012 to be challenging, as several countries around the world move to adopt austerity measures.
