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Consumer Inflation up in March

Consumers Price Index: March 2000 quarter

The Consumers Price Index (CPI) rose by 0.7 per cent in the March 2000 quarter, according to latest figures from Statistics New Zealand. This is the highest quarterly increase in the CPI since the December 1996 quarter, when a 0.7 per cent increase was also recorded. In the previous two quarters, the index rose by 0.2 per cent in December 1999, and by 0.4 per cent in September 1999, said Government Statistician Len Cook.

The most significant upward movements in the March 2000 quarter came from price increases for petrol, tomatoes, tertiary tuition, purchase and construction of new dwellings and used cars. Price falls were recorded for international air travel, stationery supplies and telephone call charges.

Price rises were widespread in the March 2000 quarter. Increases were recorded for goods and services representing 70 per cent of household expenditure. The increases included fruit and vegetables, and petrol, which strongly influenced the latest quarter's rise but could fall or have a less significant upward influence in the June 2000 quarter.

The CPI plus interest rose by 0.9 per cent in the March 2000 quarter.

On an annual basis the CPI is 1.5 per cent higher than a year ago. This follows a 0.5 per cent increase from the December 1998 quarter to the December 1999 quarter. The CPI plus interest is 1.4 per cent higher than in the March 1999 quarter.

Petrol made the most significant contribution to the overall CPI increase in the March 2000 quarter. This is the second consecutive quarter in which this has occurred. Petrol rose by 4.5 per cent this quarter following a 6.3 per cent increase in the December 1999 quarter and a 7.7 per cent increase in September 1999. On an annual basis, petrol prices increased by 19.6 per cent from the March 1999 to the March 2000 quarter. The March 2000 annual increase is the largest since the June 1985 quarter when the lifting of the 1982 to 1984 price freeze and devaluation of the New Zealand dollar contributed to an annual increase of 35.4 per cent.

Although petrol made the most significant contribution this quarter, another significant increase in the transportation group, which rose by 0.1 per cent, came from used cars. The price of used cars rose 1.8 per cent in the March 2000 quarter compared with the December 1999 quarter. A major downward contributor to the transport group was international airfares which fell 9.1 per cent. This is relatively typical at this time of year as the seasonal demand for overseas travel is lower. Annually, the transportation group is now 5.0 per cent higher compared with the March 1999 quarter.

Higher food prices also contributed significantly to this quarter's increase. Prices in this group rose by 1.4 per cent and were largely influenced by the fruit and vegetables subgroup which rose 7.6 per cent. Significant price increases were also experienced in the grocery food subgroup where biscuits rose 2.7 per cent, bread and bread rolls 1.3 per cent, and potato crisps and snack foods 2.5 per cent. The food group is now 0.2 per cent lower than in the March 1999 quarter.

The recreation and education group rose by 1.5 per cent in the March 2000 quarter. The main contributors to the group's increase this quarter were rises for primary, secondary and tertiary tuition fees. In contrast, stationery supplies had a downward influence on the overall movement, mainly due to back-to-school specials. The recreation and education group is now 2.9 per cent higher than the March 1999 quarter.

Len Cook

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