New Zealand consumer price inflation (CPI) jumped in the March quarter, rising by a hefty 1% in seasonally adjusted terms, according to data released by Statistics New Zealand (Stats NZ) earlier today.
The figure was above the median economist forecast for an increase of 0.8% and was the largest quarterly gain since the June quarter of 2011.
“Higher prices for cigarettes and tobacco, petrol, and fruit were partly offset by lower prices for international air transport, and package holidays,” said Jason Attewell, prices senior manager at Stats NZ.
“Cigarette and tobacco prices made the largest upward contribution for the quarter — rising 9.7% — reflecting the annual tax increase in the March quarter.”
SNZ said that petrol prices increased by 4.1%, while those for rents rose 0.8%.
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. It was the fastest annual increase since the September quarter of 2011.
It is also back above the mid-point of the Reserve Bank of New Zealand’s (RBNZ) 1-3% inflation target.
“Rising petrol prices along with the annual rise in cigarette and tobacco tax lifted inflation,” said Attewell. “Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes and tobacco taxes rise in the March quarter each year”.
Excluding petrol and tobacco products, annual CPI rose by a smaller 1.5%.
By source, SNZ said that tradable prices — those determined by international markets — increased 1.6%, while prices for non-tradable goods and services — related to domestic factors — rose by a larger 2.5%.
Previously, tradable inflation fell by 0.1% in the year to December 2016, while non-tradables increased by 2.4%.
And as a consequence of the hotter-than-expected CPI print, the Kiwi dollar is ripping higher in early Asian trade on Thursday.
The NZD/USD is up 0.51% at .7038 while the AUD/NZD is down 0.5% at 1.0643.
The Kiwi is now the strongest level against the Australian dollar since early March.