Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Kiwi dollar falls as CPI drops 0.2% in December quarter

CPI falls 0.2 percent in December quarter, NZ dollar plunges

Jan. 18 (BusinessDesk) - The consumer price index (CPI) fell unexpectedly by 0.2 percent in the last three months of last year, raising the likelihood of either a central bank interest rate cut or a longer period of current historic low interest rates.

The New Zealand dollar immediately fell on the announcement at 10.45 am to 83.52 US cents from 84.15 cents just prior to the release.

Market expectations had been for a 0.1 percent increase. The annual inflation rate for calendar 2012 was 0.9 percent, up from 0.8 percent in the year to September.

That means inflation continues to fall just below the bottom end of the Reserve Bank of New Zealand's statutory target range of 1 to 3 percent annually over the medium term under its Policy Targets Agreement with the government and may increase pressure for a cut to the Official Cash Rate.

Current conventional wisdom is that the RBNZ will not cut the OCR again, but is unlikely to raise it from its current historic low point of 2.5 percent.

The result showed ongoing pressure in the less competitive, non-tradable parts of the economy, such as local body rates and electricity prices, where inflation rose by 0.3 percent in the quarter.

That was offset by a 0.7 percent fall in tradable sector prices, influenced most directly by falling food prices, with a 53 percent drop in tomato prices a key component.

"The CPI has fallen in four of the past five December quarters, the exception being 2010, after the GST increase," said Statistics New Zealand's prices manager Chris Pike.

Lower prices for food, down 1.8 percent, household contents and services, which fell 1.8 percent, and communications costs, down 2 percent in the quarter all contributed to reduction.

The primary contributors to increased prices were housing and household utilities, where property maintenance services were up 2 percent owing to seasonal impacts on government subsidies for insulation and heating, rents up 0.3 percent, and the price of newly built houses, up 0.5 percent.

Seasonally higher international airfares, which rose 9.8 percent in the quarter, were a key factor in higher transport prices in the quarter.

Annually, the largest increases were in cigarettes and tobacco, up 13 percent after excise tax increases, a 2.4 percent upward movement in housing rentals, and a 5.2 percent increase in electricity prices.

Major offsets to this were a 5.7 percent annual drop in the cost of telecommunications services, a 17 percent fall in audio-visual equipment prices, and fresh milk, down 9.5 percent.

Statistics NZ also announced the formation of a periodically convened advisory group to consider changes to the composition of the primary indicator of price movements, which is used by the Reserve Bank of New Zealand in setting monetary policy and the Official Cash Rate.

Some market participants have been calling for a move from quarterly to monthly inflation statistics, which the government agency has so far resisted on grounds that it is already under-resourced for the range of statistical series it compiles.

"Frequency of the CPI compilation will definitely be one of the issues and topics," Pike told this morning's media conference.

The nine member group will be chaired by the former Retirement Commissioner, Diana Crossan.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Reserve Bank: Wheeler Keeps OCR At 1.75%

Reserve Bank governor Graeme Wheeler kept the official cash rate unchanged at 1.75 percent, as expected, and reiterated his view that the benchmark rate doesn't need shifting for the foreseeable future. More>>

ALSO:

Retail: Pumpkin Patch Brand, IP Sold To Catch Group

The receivers of failed children's clothing retailer Pumpkin Patch have confirmed that the company's brand and intellectual property have been sold to Australian online retailer Catch Group. More>>

ALSO:

Oil: 2017 Block Offer Petroleum Tender Launched

New Zealand is well-placed to take advantage of the economic benefits of oil and gas exploration, Energy and Resources Minister Judith Collins announced today at the launch of the 2017 Block Offer petroleum tender. More>>

ALSO:

OECD And Zero Carbon Reports: Environmental Pressures Rising In New Zealand

New Zealanders enjoy a high environmental quality of life and access to pristine wilderness. However, New Zealand’s growth model, based largely on exploiting natural resources, is starting to show its environmental limits with increasing greenhouse gas emissions and water pollution ... More>>

ALSO:

Statistics: Record Net Annual Migration Levels Continue

In the February 2017 year, 71,300 more migrants arrived in New Zealand than left, Stats NZ said today. This equalled the previous annual record set in January 2017. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news