NZ consumer prices rise 0.2% in 2Q as cheap petrol keeps lid on housing pressures
By Paul McBeth
July 16 (BusinessDesk) - New Zealand inflation printed just below expectations in the second quarter, as cheap imported
petrol helped counter rising housing related prices, pushing the annual rate to a 14-year low.
The consumer price index rose 0.2 percent in the three months ended June 30, just shy of the 0.3 percent expected in a
Reuters survey of economists, for an annual pace of 0.7 percent, according to Statistics New Zealand. That’s the fourth
quarter that the annual pace has been below the Reserve Bank’s target 1 percent to 3 percent target band, and is the
slowest annual pace since 1999.
Petrol prices fell 2.5 percent in the quarter, the biggest quarterly decline since September 2011, and were down 2.8
percent on an annual basis. Since the end of the quarter petrol prices have increased 5 percent.
That offset a 1.1 percent increase in housing and household utilities prices. Housing and utilities prices rose an
annual 3.1 percent. Newly built house prices rose 1.7 percent in the quarter for an annual pace of 4.1 percent, and
rental prices rose a quarterly 0.4 percent and an annual 2.1 percent.
Electricity costs rose 2.6 percent in the June quarter for an annual increase of 3.4 percent. Dwelling insurance prices
rose 9.9 percent in the quarter for an annual pace of 37 percent.
The tepid pace of inflation has meant the Reserve Bank hasn’t had to hike the official cash rate from a record-low 2.5
percent as a bubbling property market fails to spill over into increased consumer spending. The central bank has been
reluctant to lift the key rate as it might stoke investors to buy the kiwi, further strengthening an “over-valued”
currency.
The kiwi dollar averaged 76.55 in the second quarter on a trade-weighted basis, below the Reserve Bank’s projected
77.50. The TWI fell to 74.23 after the CPI report was released from 74.36 immediately before. The kiwi dipped to 77.94
US cents from 78.17 cents.
Tradable inflation, which includes goods and services facing international competition, shrank 0.5 percent in the June
quarter, and fell 1.6 percent on an annual basis. Tradable prices are at the lowest level since the September 2010
quarter, just before the government hiked goods and services tax 2.5 percentage points to 15 percent. Non-tradable
inflation rose 0.6 percent in the quarter and was up an annual 2.5 percent.
Food prices rose 0.2 percent in the quarter, led by a 7 percent increase in vegetable prices. On an annual basis, food
prices rose 0.2 percent. Grocery food prices shrank 0.2 percent in the quarter and were down 1.5 percent on an annual
basis.
Retailers trimmed their level of discounting in the quarter, with 14 percent of stock sold at a lower price compared to
16 percent in the March period. Clothing and footwear showed the biggest pull back with 15 percent sold at a discount
compared to 22 percent in March.
(BusinessDesk)