New Zealand's economic recovery showed signs of slowing in the quarter ending June, while inflation looked to be on the rise, according to a survey released by an independent economic think-tank on Tuesday.
Business confidence fell from a 20-year high of more than 50 percent net optimists in the previous six months to 33 percent in the June quarter, but was still elevated, according to the New Zealand Institute of Economic Research (NZIER) analysis of its Quarterly Survey of Business Opinion.
"Businesses are positive about the outlook, but are seeing slightly weaker growth than recent experience and expectations," NZIER principal economist Shamubeel Eaqub said in a statement.
Experienced domestic trading activity, which closely mirrored GDP growth, unexpectedly eased from 24 percent to 15 percent, consistent with annual economic growth moderating from 3.8 percent in March to a still-healthy 2.8 percent in June, he said.
Firms were beginning to raise prices at a faster pace, indicating consumer price index inflation of around 2.5 percent by the end of this year.
"Medium term capacity pressures are emerging. More firms are reporting capacity and labor as increasing constraints to growing production and sales," said Eaqub.
The Reserve Bank of New Zealand would be likely to continue raising interest rates based on the survey results, he said.
The Reserve Bank has raised the official cash rate by 25 basis points since March to 3.25 percent and has indicated another rise this month in a bid to rein in inflationary pressures.