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Low inflation continues

Treasurer Bill English said today's inflation result showed that the period of low inflation New Zealand had enjoyed through most of this decade was continuing.

"The 0.6% quarterly increase in the Consumers Price Index (CPI) in September was in line with expectations. We are looking at an annual rate of inflation of 1.3%.

"Annual inflation remains low, as it has through most of the 1990s. This shows the strength of the monetary policy framework we have; a framework that delivers consistently low inflation.

"Low inflation has delivered certainty and security by protecting the value of workers' incomes and people's savings. This is the best way of giving all New Zealanders a fair go because high inflation benefits some people at the expense of others.

"The September rise was boosted by higher oil prices, an increase in vehicle relicensing fees, and local authority rate rises.

"The strengthening economy, with solid growth of 3% predicted over the next three years, will lead to a modest rise in inflationary pressures although the forecasts are for inflation to stay within the Reserve Bank's target of 0% to 3%.

"One of the consequences of a growing economy is that all forecasters are picking a slight rise in interest rates over the next year. However, these will be well short of the highs we saw just over a year ago when floating rates reached 11.25%," said Mr English.


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