NZ third quarter inflation higher than expected

NZ third quarter inflation higher than expected on housing-related costs

By Rebecca Howard

Oct. 17 (BusinessDesk) - New Zealand consumer prices were higher than expected in the third quarter as housing-related costs continued to increase.

The kiwi dollar rose above 72 US cents for the first time since Oct. 4 and recently traded at 71.93 cents from 71.75 cents immediately before the release.

The consumers price index rose 0.5 in the three months ended Sept. 30 while annual inflation was 1.9 percent, Statistics New Zealand said.

Economists had expected inflation to be 0.4 percent in the three months ended Sept. 30, for an annual rate of 1.8 percent, according to the median in a poll of 13 economists surveyed by Bloomberg. That compares to the central bank’s projection of inflation of 0.2 percent in the third quarter for an annual rise of 1.6 percent.

The Reserve Bank is mandated with keeping annual inflation between 1-and-3 percent, with a focus on the mid-point. Acting Reserve Bank governor Grant Spencer kept the official cash rate at 1.75 percent as widely expected at the September review and signalled no change on the immediate horizon. Rates have been on hold since November last year and the central bank’s forecasts show it does not expect to lift rates until September 2019 at the earliest.

The September quarter inflation was higher than the June period when it was unchanged in the quarter and rising at an annual pace of 1.7 percent.

Housing-related prices continued to increase, up 1 percent in the quarter and 3 percent annually.

“Collectively, housing-related costs had the largest upward contribution in the September quarter, slightly offset by falls in transport prices,” Stats NZ said.

Prices for new housing rose 1.1 percent in the June quarter for an annual increase of 5.4 percent. Actual rentals for housing rose 0.6 percent in the quarter and were up 2.2 percent on the year. Rentals increased 1 percent in Wellington and 0.5 percent in Auckland and fell 0.2 percent in Canterbury, Stats NZ said. It was the largest increase in Wellington rents since December 2008.

Local body rates rose a quarterly 3.5 percent and were up 3.7 percent on the year. Local authorities set their rates annually and these mainly show in the September quarter’s data, Stats NZ said.

Refuse disposal and recycling rose 1.7 percent in the quarter and climbed 5.1 percent for the year. Household energy, which includes electricity, gas and solid fuels rose a quarterly 0.3 percent and an annual 1.7 percent.

Dwelling insurance rose 6.1 percent in the quarter and was up 12 percent on the year.

Stats NZ said the rise in housing-related costs was slightly offset by decreases in petrol prices and other transport costs.

Petrol prices fell 1.7 percent in the quarter and were up 4.5 percent on the year. The average price of a litre of 91 octane petrol was $1.83 in the September quarter, down from $1.86 in the prior quarter. Overall the transport sector – which includes fuel and other services such as airfares – fell 1.1 percent on quarter and showed an annual rise of 2 percent. Domestic airfares rose a quarterly 4 percent while international air transport fell 5.5 percent.

Food prices, meanwhile, rose 1.1 percent in the quarter, with vegetable prices rising 6.2 percent. Food prices were up 2.8 percent on the year.

The tradables CPI, which includes goods and services that compete with international rivals, rose 0.2 percent in the quarter and was up 1 percent for the year. Non-tradables inflation, which focuses on domestic inflation, rose a quarterly 0.7 percent for a 2.6 percent annual increase.

The release of the December quarter CPI data will be a week later than usual as Stats NZ is implementing a review of the index, something that happens every three years. The data will now be released on Jan. 25.

(BusinessDesk)

ends

© Scoop Media