Inflation fall predicted

By Phil Boeyen, ShareChat Business News Editor

Tuesday 9th October 2001

New Zealand's inflation rate is expected to have dropped back in the quarter ended September according to forecasts from Deutsche Bank.

The bank is predicting that the Consumers Price Index will have increased by 0.6% on the previous quarter, leading to a fall in the annual rate of inflation from 3.2% to 2.4%.

"The main contributor to the quarterly result is expected to be the food group, with domestic food prices rising on the back of high world prices for agricultural commodities, as well as the low New Zealand dollar," says the bank's chief economist, Ulf Schoefisch.

"The annual excise tax increase for alcoholic drinks will make another sizeable contribution, while the rise in the housing group will reflect increased construction costs and local authority rates."

Mr Schoefisch says a key negative contribution will be transport, due to a 4% decline in petrol prices.

In the June quarter the CPI rose by 0.9%, pushing the annual inflation rate to 3.2% and reversing a fall of 0.2% in the previous quarter.

Price pressure in the three months ended June was strongly influenced by higher prices for petrol and international airfares.

The figure for the September quarter CPI is due to be released next week.

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