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


NZ inflation steady at 0.3% in 2Q, kiwi falls

NZ inflation steady at 0.3% in second quarter, matching RBNZ forecast; kiwi falls

By Jonathan Underhill

July 16 (BusinessDesk) – New Zealand inflation held steady in the second quarter compared to the first-quarter pace as gains in prices of electricity, home rentals and new houses were partly offset by cheaper package holidays, vehicles and liquor. The New Zealand dollar fell.

The consumers price index was unchanged at 0.3 percent, for an annual rate of 1.6 percent, according to Statistics New Zealand. That’s below the 0.4 percent quarterly and 1.8 percent annual pace forecast in a Reuters survey and broadly in line with the central bank’s expectations. The currency dropped to 87.25 US cents from 87.65 cents immediately before the release.

The data suggests the Reserve Bank won’t be deterred from raising the official cash rate to 3.5 percent at its July 24 review to restrain inflation it sees rising to a 2.1 percent annual rate in June next year, breaching the mid-point of its 1 percent-to-3 percent target. Electricity prices have been rising as network operators pass on the costs of upgrading their lines.

“Growing momentum in New Zealand economic activity should flow through to a lift in underlying inflation over 2015 and 2016,” economists at ASB said before the data was released. “Added to that will be the likely lessening dampening effects of the high New Zealand dollar on tradable inflation.”

The tradable component of CPI rose 0.2 percent in the second quarter, half the rate of the non-tradable component, which rose 0.4 percent. In the year, tradable inflation was 0.1 percent, the first gain since March 2012, while non-tradable inflation was 2.7 percent.

The trimmed mean measures, which exclude extreme price movements to show ‘underlying’ price changes, were 0.2 percent in the second quarter.

Prices for housing and household utilities rose 1.2 percent in the latest quarter, the biggest upward contribution to the CPI, as electricity prices rose 4.2 percent, housing rents gained 0.6 percent and newly built houses excluding land rose 1.2 percent.

The government statistician said the gain for housing and household utilities was the largest since a 1.6 percent gain in the fourth quarter of 2010. On an annual basis it was up 3.4 percent.

Food prices rose 0.9 percent in the quarter, driven by a 13 percent jump in vegetables and a 2.5 percent gain for milk, cheese and eggs. Food prices rose 1.6 percent in the year.

Package holiday prices fell 6.5 percent in the quarter, likely influenced by the buying power of a high kiwi dollar. Fruit fell 4.9 percent, vehicle purchases declined 1.2 percent and alcoholic beverages dropped 0.7 percent.

Among other groups, household contents and services gained 1.1 percent in the quarter, health was up 0.2 percent, education gained 0.4 percent and clothing and footwear was up 0.1 percent. Recreation and culture dropped 1.1 percent, transport was down 0.3 percent, and communication fell 0.9 percent.

Six of the 11 groups measured rose and five fell.

The inflation data comes after the Quarterly Survey of Business Opinion showed a net 33 percent of firms surveyed expect to lift prices in the next three months, the second quarter in a row where expectations were above the long-run average.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news