NZ 4Q inflation remains stuck in neutral

By Rebecca Howard

Jan. 23 (BusinessDesk) - New Zealand’s inflation remained stuck in neutral in the fourth quarter as petrol prices fell. The data was in line with economists’ expectations but slightly below what the central bank had tipped.

The Consumers Price Index rose 0.1 percent in the three months ended Dec. 31, taking annual inflation to 1.9 percent, Stats NZ said.

Economists had been expecting the consumers price index would increase zero to 0.1 percent in the three months, for an annual increase of 1.8 to 1.9.

The Reserve Bank had tipped a quarterly rise of 0.2 percent and an annual increase of 2 percent.

The New Zealand dollar was trading at 67.46 US cents shortly after the announcement from 67. 21 cents just beforehand.

The central bank is mandated with keeping annual inflation between 1 and 3 percent over the medium term, focusing on the mid-point.

Stubbornly weak inflation has kept interest rates on hold at a record low 1.75 percent. Annual inflation has ranged between 1.1 percent and 2.2 percent since December 2016, Stats NZ said.

The central bank has consistently signaled no change in interest rates on the immediate horizon, given the lack of inflationary pressure, and today’s data is unlikely to shake that view.

Petrol prices fell 0.6 percent in the quarter and were up 11.1 percent in the year.

“The price of petrol fell continually throughout the quarter, down from highs in October,” prices senior manager Paul Pascoe said. “By the last week of December, the pump price was 8.3 percent below the December quarter average.”

Cigarette and tobacco prices fell for the first time since December 2009 and were down 1.3 percent on the quarter. In the past nine years, the average price of a pack of cigarettes rose more than 160 percent to $34.57. They were up 9.2 percent on the year.

Stats NZ said the overall 0.1 percent quarterly lift was led by seasonal rises in international airfares, but these were largely offset by seasonal falls in the prices for vegetables.

International air transport lifted 7.6 percent on the quarter but was down 4 percent on the year.

Vegetables meanwhile tumbled 20.7 percent from the prior quarter and were down 8.4 percent on the year.

Food prices overall were down 1.3 percent on the quarter and were up 0.6 percent on the year.

Within the housing sector, housing and household utilities lifted 0.5 percent versus the September quarter and 3.1 percent on the year.

Actual rentals for housing rose 0.6 percent in the quarter and were 2.4 percent higher for the year. Household energy prices, which include electricity, gas and solid fuels, were unchanged on the quarter and were up 2.3 percent on the year.

Prices for the purchase of newly-built homes lifted 0.9 percent on the quarter and were up 3.6 percent on the year.

The tradables CPI, which includes goods and services that compete with international rivals, fell 0.4 percent in the quarter and was up 0.9 percent in the year. Non-tradables inflation, which focuses on domestic goods and services, rose a quarterly 0.7 percent for a 2.7 percent annual increase.

(BusinessDesk)

ends

© Scoop Media