New Zealand Q3 inflation picks up, driven by rising housing costs

Cornelia Mascio
Ottobre 17, 2017

Collectively, housing-related costs had the largest upward contribution in the September 2017 quarter, slightly offset by falls in transport prices.

Economists had expected inflation to be 0.4 per cent in the three months ended September 30, for an annual rate of 1.8 per cent, according to the median in a poll of 13 economists surveyed by Bloomberg. That compares to the central bank's projection of inflation of 0.2 percent in the third quarter for an annual rise of 1.6 percent. The currency then gave up some of its gains, settling around $0.7185.However, economists said the RBNZ was unlikely to waver from its determination to keep interest rates at record lows for years while it waited for previously-tepid inflation to stabilize around 2 percent."For now, inflation sits comfortably in line with the Reserve Bank's target".

"In the latest quarter petrol prices fell 3 cents, to an average of $1.83 a litre, despite rising through August and September", Mr Attewell said.

The latest result also overshot the Reserve Bank of New Zealand's forecasts for the quarter, due largely to the costlier food, smaller-than-expected falls in gasoline prices and a recent softening of New Zealand dollar strength from highs at the end of July.

Rents rose 0.6 percent in Q3 and 2.2 percent in the year. Rentals increased 1 percent in Wellington and 0.5 percent in Auckland and fell 0.2 percent in Canterbury, Stats NZ said.

Food prices, meanwhile, rose 1.1 per cent in the quarter, with vegetable prices rising 6.2 per cent. Food prices were up 2.8 per cent on the year.

Housing and household utilities increased 3.0 percent, with purchase of new housing up 5.4 percent, and rentals for housing up 2.2 percent.

Petrol prices fell 1.7 percent in the quarter and were up 4.5 percent on the year.

However, most of the difference was on the tradables side, which includes relatively volatile items such as food and fuel prices.

Transport prices fell 1.1 percent, with cheaper petrol prices (down 1.7 percent), and global airfares (down 5.5 percent). He faced much criticism during his five-year term as the CPI tracked well below that 2% mid-point; other than the March 2017 quarter's 2.2% annual reading, the CPI hasn't been this close to 2% since a 1.8% reading in the year to December 2011.

The tradables CPI, which includes goods and services that compete with global rivals, rose 0.2 percent in the quarter and was up 1 percent for the year.

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