New Zealand consumer price inflation (CPI) rose more than expected in the September quarter, according to data released by Statistics New Zealand (StatsNZ) today.
Prices rose by 0.5% for the quarter, topping the median economist forecast that was looking for an increase of 0.4%.
Previously CPI was flat in the June quarter.
StatsNZ said that housing-related costs made the largest upward contribution to CPI during the quarter, offset by falls in transport prices.
“Housing and household utilities rose 1.%, influenced by local authority rates (+3.5%) rentals for housing (+0.6%), and purchase of new housing (+1.1%),” it said.
Food prices also made a hefty contribution to the headline increase in CPI, rising 1.1% on the back of a 6.2% jump in vegetable prices.
Those gains were partially offset by weaker transport prices which fell 1.1%, a result largely reflecting cheaper petrol and international airfares.
As a result of the small quarterly beat, the year-on-year rate accelerated to 1.9% from 1.7% in the June quarter, above the 1.8% pace expected.
The Reserve Bank of New Zealand’s annual CPI target is 1 to 3%.
Over the year, StatsNZ said that housing and household utilities increased by 3% while food prices rose by a smaller 2.8%.
Those increases were partially offset by a 5.3% decline in communications prices.
Prices for tradable goods and services — those influenced by global factors — rose by 1% over the year, outpaced by a 2.6% increase in non-tradable prices.
Excluding volatile price movements, underlying CPI rose by 0.5% for the quarter, leaving the increase over the year at 1.5%. That was slightly faster than the 1.4% level reported in the June quarter.
“The modest strengthening in headline and underlying price pressures in the third quarter don’t dramatically alter the outlook for interest rates, but at the margin they suggest that rates may rise a little bit earlier than the RBNZ’s current suggestion of sometime late in 2019,” said Paul Dales, chief Australia and New Zealand economist at Capital Economics.
The New Zealand dollar has spiked following the release of the inflation report, rising 0.25% to .7188 against the US dollar.
It briefly hit a high of .7200 before easing in recent trade.
More to follow…