ANZ economists are tipping a quarterly rate of 0.8% for a 2.3% annual rate. Westpac and ASB see a 0.7% rate for an annual rate of just 2.2%.

Westpac senior economist Satish Ranchhod warned that there were risks on both sides in terms of inflation forecasts.

“On the downside, the downturn in consumer spending could be an even larger drag on the prices of retail goods and some services.

“However, there is also a chance we see continued strength in the prices of items like insurance and rates, which have contributed to stronger-than-expected non-tradeable inflation over the past two years.”

ANZ senior economist Miles Workman also sounded a note of caution around elevated domestic inflation.

“Headline CPI inflation falling back into the 1-3% band may represent a key psychological threshold for policymakers and RBNZ watchers. But should the RBNZ break out the bubbly now annual inflation has a two-handle?” he said.

“We hate to be party poopers, but non-tradeable inflation is still way too high, meaning if the sound of corks popping does resonate through the RBNZ building next week, they’ll be celebrating global disinflation progress just as much as their own. Domestic disinflation does appear poised to continue, but there’s still a way to go.”

ANZ economists expect non-tradable (domestically driven) inflation to come in at 1.5% for the quarter and 5.2% annually. That would only be a slight fall from the 5.4% annual rate recorded in the second quarter.

Local council rates were expected to be a key driver of quarterly inflation, posting their largest quarterly rise since 1987, Workman said.

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.