Annual rate of inflation stable at 1.2% in March - NSO

Posted April 20, 2017

The headline quarterly increase left the year-on-year rate at 2.2%, up from 1.3% in the December quarter and above the 2.0% figure expected.

Bad weather caused a sharp rise in fresh fruit, a jump in world oil prices forced higher fuel costs, while the strong housing market is forcing up the cost of new houses and rents.

It was the highest annual increase since the September 2011 quarter, when the goods and services tax - a sales tax - rose from 12.5 percent to 15 percent.

New Zealand will on Thursday release Q1 figures for consumer prices, setting the pace for a modest day in Asia-Pacific economic activity.

"Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation", said Attewell.

The rise was stronger than expected and the New Zealand dollar jumped across the board, gaining about 0.25 cents against the United States dollar. "The RBNZ's February forecasts assumed inflation wouldn't be back at these sort of levels until 2019", Westpac Research commented in its latest report.

Official numbers show inflation of 1 percent for the three months ended March, pushing the annual rate to 2.2 percent, the highest since mid-2011.

Housing prices continued to increase, and were up 3.3 per cent in the March 2017 year, with newly built houses up 6.7 per cent, and rentals up 2.3 per cent. They were up 3.9 percent on the year.

Food prices were boosted by stronger prices for apples and milk, both of which were seeing strong global prices, which could push up demand locally.

The central bank in Indonesia will wrap up its monetary policy meeting and then announce its decision on interest rates; the bank is widely expected to keep its benchmark lending rate unchanged at 4.75%. The food group also rebounded 2.2 percent from 1.2 percent fall in December of 2016 quarter.

Tradeables inflation, which includes goods and services that compete with worldwide rivals, rose 0.8 percent in the quarter and 1.6 percent on the year.