NZ CPI up 1 pct in June quarter, 5.3 pct for year

NZPA

Monday 18th July 2011

New Zealand consumers price index (CPI) inflation rose ahead of expectations, with a 1 percent lift in the June quarter from the previous three months, and a 5.3 percent rise for the year.

The annual increase included a 2.3 percent gain from the December quarter lift in GST from 12.5 to 15 percent.

The median forecast in a Reuters poll of economists had been for a 0.8 percent rise in the latest quarter and a 5.1 percent gain for the year.

The New Zealand dollar shot up from around US84.45c to US84.90c within a few minutes of Statistics New Zealand (SNZ) releasing the data, before easing to around US84.75c around 11.30am.

SNZ said the main factor in the June quarter rise was a 2.7 percent lift in the transport sector, reflecting higher prices for petrol and airfares.

Food prices were up 1.1 percent in the quarter, while housing and household utility prices rose 0.9 percent with higher prices for electricity.

If prices collected for the CPI had been processed with GST of 12.5 percent, the rise would have been 0.9 percent in the June quarter and 3.3 percent for the year, SNZ said.

The 5.3 percent annual increase was the largest since the June 1990 quarter, which also included a GST rise.

In the latest year transport prices rose 11 percent, food was up 7 percent, and housing and household utilities rose 4.4 percent.

Petrol prices rose 4 percent in the June quarter and were up 20.1 percent for the year, while international air transport lifted 6.8 percent in the latest quarter, while domestic air transport gained 8 percent.

Second-hand cars were up 2.5 percent in the three months to June, and gained 6.6 percent over the year.

Electricity prices rose 2.7 percent in the latest quarter, and were up 7.8 percent for the year.

The price of buying new housing rose 0.9 percent in the June quarter, the largest rise since September 2008, excluding the GST-influenced December quarter. The latest rise was affected by increases for Canterbury and the rest of the South Island. For the year the purchase of new housing was up 3.4 percent.

Housing rentals rose 0.5 percent in the latest quarter, as the cost of renting rose in Auckland.

The tradable component of the CPI -- goods and service that are imported or in competition with foreign goods -- rose 1.5 percent in the June quarter and 5.5 percent for the year.

Non-tradables -- goods and services facing no foreign competition -- rose 0.6 percent for the quarter and 5.2 percent for the year.

BNZ head of research Stephen Toplis said today's data was consistent with a view that core inflationary pressure was rising. A "very high" headline inflation number tended to feed through to inflation expectations.

UBS senior economist Robin Clements said a quick analysis suggested maybe as much as half the rise could be regarded as one-offs, not core inflation.

"So it's not quite as bad as the headline appears."

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