18 April 2001 Media Statement

CPI result encouraging - Cullen

"The March CPI result was below market expectations and is consistent with inflation returning back to within the 0 to 3 percent target range later this year," Finance Minister Michael Cullen said today.

The CPI fell 0.2 percent over the quarter, taking the annual rate to 3.1 percent.

"Much of the credit for containing the inflationary pressures in the economy should go to the ordinary New Zealander," Dr Cullen said.

"Clearly businesses are absorbing some of the price pressures created by the low dollar, and workers are being responsible in their approach to wage negotiations.

"But Government policies also had an important impact.

"The biggest single contribution to the drop in the CPI came from the restoration of income related rents for low income state housing tenants. Statistics New Zealand calculates this led to a 9.7 percent fall across all dwelling rentals.

"Also, the usual upward pressure on the index at this time of year from tertiary fees failed to materialise due to the Government's fee stabilisation policy," Dr Cullen said.

The other big contributors to the drop were: lower petrol prices and international air fares.

ENDS

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