March quarter inflation falls

By Phil Boeyen, ShareChat Business News Editor

Wednesday 18th April 2001

The Consumers Price Index has fallen for the first time in two years due to lower rentals for state housing.

Latest figures show the CPI fell by 0.2% in the March 2001 quarter, following an increase of 1.2% in the December 2000 quarter.

Statistics New Zealand says it's the first fall in the CPI since the March 1999 quarter, when it fell 0.3 per cent.

The latest fall is strongly influenced by the move from market rents to income related rents for Housing New Zealand tenants, which caused dwelling rentals to fall 9.7% and resulted in a 1.9% fall in the housing group of the CPI.

If Housing New Zealand rentals had remained unchanged from the December 2000 quarter, the latest CPI would have increased by 0.4%

Statistics New Zealand says the only other significant group-level contribution to the fall in the index from the previous quarter came from transportation, which fell 2.6%, reflecting lower petrol prices and the usual seasonal fall in international air travel.

Food, tobacco and alcohol, and personal and health care accounted for the major upwards pressure on the index, with the most significant individual upward item-contributions coming from used cars, cigarettes and medical insurance.

Finance Minister Michael Cullen says the latest CPI result was below market expectations and is consistent with inflation returning back to within the 0 to 3% target range later this year.

"Much of the credit for containing the inflationary pressures in the economy should go to the ordinary New Zealander," he says.

"Clearly businesses are absorbing some of the price pressures created by the low dollar, and workers are being responsible in their approach to wage negotiations.

However Mr Cullen says government policies regarding state housing rentals also had an important impact.

Comments from our readers

No comments yet