Elevated levels of inflation remain in New Zealand for the time being.
The annual consumer price index was 6.7 percent last month, according to statistics published on Thursday. The index, however, defied forecasts for a smaller drop from December's 7.2 percent figure.
It highlighted New Zealand may not suffer high inflation for as long as expected. At the same time, risks still remain.
The Reserve Bank worries elevated inflation will continue because economic "demand continues to outpace supply".
"There is still a large bow wave of inflationary pressure in place, with very high rates of core and non-tradable inflation evident. However, there are signs domestic pricing pressures may also be cooling," said Mark Smith, a senior economist at ASB.
Last week, the International Monetary Fund predicted New Zealand's inflation would average 5.5 percent in 2023 - the second-highest of advanced Asia-Pacific economies but not far above Australia's 5.3 percent projection.
One thing is clear from Thursday's figures - food is playing a big part in New Zealand's economic pain.
New Zealand consumer food prices were 11.3 percent higher in March than a year earlier, bigger than December's annual increase of 11 percent. And that increase wasn't as bad as it could've been, given the boosts that were expected in the wake of Cyclone Gabrielle and the Auckland flooding.
"However, it is still early days and we expect the inflationary impacts to surface over the remainder of 2023," Smith noted.
Time will tell whether New Zealand's food prices will follow world food costs, which fell for the 12th month running in March after surging to record highs last year.
But a domestic and global recession - forecast for this year - would likely fasten the pace of the decline in inflation.
"Increasing net immigration and softer labour demand could help alleviate frictions and cool core and non-tradable inflation. The cooler housing market is starting to drive down housing-related consumer price inflation and, hence, the overall domestic inflation pulse," Smith added.
"However, the inflation outlook is inherently uncertain and we have been here before. The full inflation impacts of Cyclone Gabrielle are yet to come."
