CPI Annual Inflation Rises to 3.3 Percent

27 April 2006

CPI Annual Inflation Rises to 3.3 Percent

Revised 27 April 2006 – See attached Erratum

The annual inflation rate, as measured by the Consumers Price Index (CPI), was 3.3 percent for the year to the March 2006 quarter, up from 3.2 percent for the year to the December 2005 quarter, Statistics New Zealand said today. On a quarterly basis, consumer prices increased 0.6 percent in the March 2006 quarter, following a 0.7 percent increase in the December 2005 quarter.

Significant contributions to the 3.3 percent annual increase in the CPI came from higher prices for petrol (up 23.5 percent), and the purchase and construction of new dwellings (up 5.9 percent). The annual increase for petrol is the largest recorded since the September 2000 quarter, when petrol prices increased 31.1 percent. If petrol prices had remained unchanged from the March 2005 quarter, the annual increase in the CPI would have been 2.5 percent. Similiarly, if construction prices had remained unchanged, the CPI would have increased 2.8 percent.

Major contributions to this quarter's increase came from the housing (up 0.8 percent), food (up 1.0 percent), and recreation and education (up 1.2 percent) groups. The most significant downward contribution came from the transportation group (down 0.3 percent). Within these groups, major upward contributions came from higher prices for petrol (up 5.1 percent) and the purchase and construction of new dwellings (up 1.0 percent). Partly offsetting these were lower prices for international air travel (down 12.3 percent).

Brian Pink
Government Statistician

ENDS

Erratum

Revision to the Consumers Price Index: March 2006 quarter

An error in processing has resulted in the publication of incorrect figures in the Consumers Price Index: March 2006 quarter information release issued on 19 April 2006. The error arose in calculating the net effect of subsidies provided to child care providers, following recent changes in government policy. All figures are now correct, and incorporate revisions to the following indexes – 'CPI all groups', 'recreation and education', and 'child care'.

The impact on the CPI 'all groups' index is small, resulting in a revision of half an index point.

As a consequence of rounding procedure, the published index has been revised by one index point. The increase in the CPI from the December 2005 quarter has been revised downward to 0.6 percent, from 0.7 percent. The change from the March 2005 quarter to the March 2006 quarter has been revised downward to 3.3 percent, from 3.4 percent.

In the normal course of business, minor errors of this sort are shown as a correction to the index levels in the following quarter. However, given that the error in child care has resulted in a change in the higher-level indexes, this correction has been made promptly, and Statistics NZ hopes this will help avoid disruption to the wide range of users of the 'all groups' CPI.

We regret any inconvenience this error may have caused.

The Tables, Highlights and Commentary sections have been changed to reflect these revisions.

Brian Pink
Government Statistician

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