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CPI Driven by a Few Big Rises

Consumers Price Index: June 2000 quarter

CPI Driven by a Few Big Rises

The Consumers Price Index (CPI) rose by 0.7 per cent in the June 2000 quarter, according to latest figures from Statistics New Zealand. This follows an increase of 0.7 per cent in the March 2000 quarter which was the largest quarterly increase in the CPI since the December 1996 quarter, when a 0.7 per cent increase was also recorded.

The June quarter increase was driven by significant price increases for a relatively limited range of items. Compared with the March quarter rise, items representing a smaller proportion of household expenditure recorded price increases in the June 2000 quarter, but these June quarter increases tended to be larger.

The most significant upward movements in the June 2000 quarter came from price increases for cigarettes and tobacco, international air fares and petrol. A significant fall was recorded for used car prices.

On an annual basis the CPI is 2.0 per cent higher than a year earlier. This follows a 1.5 per cent increase from the March 1999 quarter to the March 2000 quarter and is the largest annual increase for three and a half years.

Cigarettes and tobacco made the most significant contribution to the overall CPI increase in the June 2000 quarter, recording an increase of 7.7 per cent. This reflects an increase in excise duty on cigarettes and tobacco that took effect in May and will also contribute to an increase in the September quarter CPI. On an annual basis, cigarette and tobacco prices increased by 9.9 per cent from the June 1999 quarter to the June 2000 quarter. The June 2000 annual increase is the largest since the March 1999 quarter when an annual increase of 14.2 per cent was recorded.

International air fares recorded a significant increase this quarter, making the most significant contribution to the transportation group's increase of 1.6 per cent. The price of international air fares rose 9.7 percent in the June quarter, which is relatively typical for this time of year as the seasonal demand for overseas travel increases. Petrol prices also rose this quarter, increasing by 4.3 per cent. This follows increases in the previous three quarters of 4.5 per cent, 6.3 per cent and 7.7 per cent respectively. On an annual basis petrol prices increased by 24.9 percent from the June 1999 quarter to the June 2000 quarter.

These rises in the transportation group were offset by a decrease in the price of used cars which fell by 2.4 per cent. Annually, the transportation group is 6.0 per cent higher than a year ago.

The food group provided the largest price drop this quarter, falling 0.4 per cent. The major contributor to this fall was the grocery food, soft drinks and confectionery subgroup which fell 0.8 per cent. The next biggest contributor was the fruit and vegetables subgroup which recorded a decrease of 1.6 per cent, mainly due to a 15.7 per cent fall in the seasonally adjusted price of tomatoes.

The CPI plus interest rose 1.0 per cent in the June 2000 quarter and is now is 2.2 per cent higher than in the June 1999 quarter.


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