NZ consumer prices rise at fastest quarterly pace in 2 years
NZ consumer prices rise at fastest quarterly pace in 2 years, annual inflation back within RBNZ target
By Paul McBeth
Oct. 16 (BusinessDesk) - New Zealand inflation rose at its fastest quarterly pace in two years as petrol prices increased and out-of-season vegetables were more expensive, lifting the annual pace back within the Reserve Bank’s target band for the first time in a year.
The consumers price index increased 0.9 percent in the three months ended Sept. 30, its fastest pace since June 2011, and accelerating from a 0.2 percent increase in June, according to Statistics New Zealand. That was in line with expectations in a Reuters survey of economists. The annual pace of inflation accelerated to 1.4 percent, back within the central bank’s target band of between 1 percent and 3 percent, from 0.7 percent in June, the slowest pace in 14 years, and slightly ahead of expectations.
The increased pace was underpinned by a 5.6 percent lift in petrol prices, the biggest quarterly gain since March 2011, and a 20 percent jump in vegetable prices due to more expensive lettuce, tomatoes, capsicum and broccoli. Local body rates increased 3.8 percent as councils set new rates, while prices for newly built houses increased 0.9 percent.
Those increase offset cheaper clothing and footwear, where prices fell 0.8 percent in the quarter.
The tepid pace of inflation has meant the Reserve Bank hasn’t had to hike the official cash rate from a record-low 2.5 percent as a bubbling property market fails to spill over into increased consumer spending. The central bank has been reluctant to lift the key rate as it might stoke investors to buy the kiwi, further strengthening an “over-valued” currency, though it has since signalled plans to raise the OCR next year.
The New Zealand dollar rose to 83.94 US cents from 83.75 cents immediately before the 10:45am release of the report.
Tradable inflation, which includes goods and services facing international competition, rose 1.2 percent in the September quarter, and fell 0.5 percent on an annual basis. Non-tradable inflation rose 0.7 percent in the quarter and was up an annual 2.8 percent.
Prices for housing and household utilities rose 3.2 percent on an annual basis, with newly built housing up 4.1 percent, property maintenance services increasing 5.1 percent and refuse disposal and recycling prices increasing 8.3 percent. Dwelling insurance prices have increased 19 percent in the year ended Sept. 30 on higher premiums from the spate of earthquakes in recent years.
The Reserve Bank is watching the cost of the country’s construction boom in Auckland and Christchurch closely to see whether wage growth in those areas will spill over into wider inflation.
Food prices rose 1.7 percent in the quarter on the more expensive vegetables, and were up 0.8 percent on an annual basis.
Petrol prices increased 3.7 percent on an annual basis, underpinning a 0.9 percent lift in transport group prices.