ANZ economists continue to think there’s a high chance that forthcoming data will show more work needs to be done by the Reserve Bank to return inflation to its target in an acceptable time frame

The latest ANZ Business Outlook (ANZBO) Survey certainly "doesn’t suggest the economy is rolling over or that inflation has been beaten", the ANZ economists say.

"Has the RBNZ [Reserve Bank] done enough to bring inflation back down to target? We continue to think there’s a high chance that forthcoming data will show more work needs to be done to return inflation to target in an acceptable time frame. As the adage goes, time will tell," ANZ chief economist Sharon Zollner said.

In its first Official Cash Rate review of the year on Wednesday the RBNZ left the rate unchanged at 5.5%. ANZ economists had expected the OCR to be raised.

Zollner said results in the latest ANZBO survey continued to portray a patchy economy, "with green shoots in some areas, but ongoing challenges in others".

“On the inflation side of things, there was a marginal progress. Inflation expectations took another step lower. Cost expectations and pricing intentions were little changed and are clearly still far too high and going broadly sideways," she said.

"More encouragingly, firms’ estimates of what they expect to do with their own selling prices in three months’ time eased. Getting this down has been hard yards: it has been basically flat since August last year."

Zollner said renewed shipping woes for retailers and the agriculture sector "are starting to look concerning".

"Freight delays to and from Europe are particularly significant at present, with ships diverting around Africa due to the risk of attacks in the Suez Canal, and the capacity of the Panama Canal also restricted due to drought."

Zollner said although the net proportion of firms expecting higher costs in the next three months "has barely budged", the expected magnitude of those cost increases fell.

Reported wage increases versus a year earlier were little changed. Average expected wage settlements over the next 12 months eased slightly.

In terms of the 'headline' results in the survey the February ANZBO saw business confidence ease 2 points, but own activity lifted as did most forward-looking indicators.

Zollner noted that the "reported past activity" questions have now been in the survey for four years, enough to demonstrate a solid correlation with annual GDP growth.

"It's certainly a mixed bag, with a notable dive for the construction sector in February.

"But overall, the data suggests that things have been a little bit brighter in the last few months (in annual growth terms) than they were in the September-November period last year, consistent with low but positive annual GDP growth," Zollner said.