As described in the Predicate Programming Guide, string comparisons in an NSPredicate can be made case insensitive by including a [c] (in square brackets) after the comparison operator (e.g. BEGINSWITH[c]). You can make the comparison diacritic insensitive using a [d] modifier or case and diacritic insensitive with a [cd] modifier. In your example, you would use:
[NSPredicate predicateWithFormat:@"region=%@ && locality CONTAINS[cd] %@", self.region, query]
for case and diacritic insensitivity.