NZ consumer prices unexpectedly rise in December quarter on more expensive airfares, housing
By Paul McBeth
Jan. 21 (BusinessDesk) - New Zealand inflation unexpectedly edged higher in the final three months of 2013, led by more expensive airfares, housing and dairy prices.
The consumers price index increased 0.1 percent in the three months ended Dec. 31, slowing from a quarterly increase of 0.9 percent, according to Statistics New Zealand. That was against a forecast decline of 0.1 percent in a Reuters survey of economists and the Reserve Bank’s expectation of a 0.2 percent fall. The annual pace of inflation was 1.6 percent, its fastest pace since March 2012 and slightly ahead of forecasts.
The increase was underpinned by a 12 percent rise in the price of international airfares, the biggest quarterly gain in four years, and a 6.7 percent increase in domestic flights.
“International airfares usually rise in December quarters,” prices manager Chris Pike said in a statement. “This quarter’s rise reflects seasonally higher air fares to Asia and Europe.”
Prices for housing and household utilities rose 0.5 percent with a 1.1 percent rise in the cost of new housing and a 1.6 percent increase in property maintenance services. Prices for milk cheese and eggs advanced 4.2 percent in the quarter.
Those were offset by a 20 percent drop in the price of vegetables and a 3.5 percent decline in the price of petrol.
Investors were awaiting the release of today’s data with the Reserve Bank scheduled to review monetary policy next week. Governor Graeme Wheeler had previously indicated he will start hiking the 2.5 percent official cash rate this year to head off the threat of future inflation as the Auckland and Christchurch property markets continue to bubble and as the Canterbury rebuild gathers momentum.
Before the release, traders were betting the Reserve Bank will hike interest rates by 109 basis points over the coming year, according to the Overnight Index Swap curve, and economists had been pencilling in March as the likely date for Wheeler to start tightening policy.
Tradable inflation, which includes goods and services facing international competition, shrank 0.5 percent for an annual decline of 0.3 percent. Non-tradable inflation rose a quarterly 0.5 percent for an annual pace of 2.9 percent, its fastest pace since September 2011.
The annual pace of inflation, which stayed in the Reserve Bank’s target band of between 1 percent and 3 percent, was driven by a 3.2 percent increase in housing and household utilities, with a 4.7 percent increase in new housing prices, a 2.1 percent rise in rental prices, 4.3 percent increase in property maintenance, and a 3 percent rise in electricity prices. Petrol prices for an annual 0.9 percent
Prices for clothing and footwear fell an annual 1.4 percent, led by cheaper women’s clothing, clothing accessories and men’s footwear, and 2.8 percent decline in the annual price of communications was led by a 21 percent slide in prices for telecommunication equipment.
The level of discounting in the quarter was unchanged at 15 percent of prices discounted from the September period.