New Zealand Inflation Picks Up Speed in 3Q

Lloyd Doyle
October 17, 2017

Food bills rose 1.1 percent on strong global prices for soft commodities, while new government charges pushed non-tradables inflation, excluding housing, to a three year high of 2.2 percent."There are tentative signs that inflation's broadening beyond housing but we've been here before that that's petered out", said Philip Borkin, economist at ANZ Bank.

Economists had expected inflation to be 0.4 percent in the three months ended September 30, for an annual rate of 1.8 percent, according to the median in a poll of 13 economists surveyed by Bloomberg. Prices for second-hand motor cars fell 0.9 percent this quarter and increased 1.8 percent in the year. The reading was also well above the 1.6 percent predicted in August by the Reserve Bank of New Zealand (RBNZ). Rates have been on hold since November past year and the central bank's forecasts show it does not expect to lift rates until September 2019 at the earliest.

The September quarter inflation was higher than the June period when it was unchanged in the quarter and rising at an annual pace of 1.7 per cent.

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.

Prices for new housing rose 1.1 percent in the June quarter for an annual increase of 5.4 percent.

Rents rose 0.6 percent in Q3 and 2.2 percent in the year. Stats doesn't publish a core inflation measure, but said its trimmed mean measures - excluding extreme rises and falls - all showed a quarterly change of 0.5%.

Local authority rates rose 3.5 percent this quarter and 3.7 percent in the year. Local authorities set their rates annually and these mainly show in the September quarter's data, Stats NZ said.

Communication prices decreased 5.3 percent, with telecommunications services down 4.5 percent and equipment down 22 percent. The average price of a litre of 91 octane petrol was $1.83 in the September quarter, down from $1.86 in the prior quarter.

Transport prices fell 1.1 percent, with cheaper petrol prices (down 1.7 percent), and worldwide airfares (down 5.5 percent). NZ First MP Shane Jones made a cryptic comment Tuesday morning about policies being faithful to the poor - rises in the prices of essential items like food and housing may add fuel to the fire. Vehicle re-licensing fees fell 8.0 percent this quarter and 8.0 percent in the year.

Other reports by Iphone Fresh

Discuss This Article