Surging petrol prices push up inflation

Monday 18th April 2011

Soaring petrol prices were a key factor behind a 0.8% rise in the consumers' price index (CPI) in the March quarter and a 4.5% rise for the year to March, Statistics New Zealand (SNZ) figures show.

The rise was slightly less than expected, with the median forecasts in a Reuters survey having been for a 1% rise over the quarter and a 4.6% gain on the year.

The result knocked back the high flying New Zealand dollar which had briefly topped US80c for the first time in three years earlier, but fell from around US79.85c to US79.55c in the minutes after the data was released.

SNZ prices manager Chris Pike said the 0.8% March quarter rise in the CPI reflected higher prices for petrol, cigarettes, tobacco, and food.

The transport group rose 2.5% in the quarter, with a rise in petrol prices of 9.7% being countered by a seasonal fall of 9.2% in international airfares.

"Petrol prices have increased strongly over the past six months and at the end of March were only slightly below their peak in July 2008," Pike said.

Cigarette and tobacco prices rose 9.4% in the March quarter, reflecting an 11.6% increase in excise duty at the start of 2011.

Food prices rose 1.2%, with prices for grocery food up 1.1% and meat, poultry, and fish up 2.1%. The rise in grocery food prices reflected a 1.4% rise in prices for bread and cereals, along with a 1.3% rise in prices for the milk, cheese, and eggs group.

The 4.5% rise in the CPI for the year to the March quarter included a 2.3% increase in the December quarter when GST rose from 12.5 to 15%.

Significant upward contributions in the year to March came from an 8.2% rise in prices for transport, a 4% rise in housing and household utilities, a 4.8% rise in food, and an 11.4% rise in alcoholic beverages and tobacco.

Petrol prices rose 17.1% in the year, while cigarette and tobacco prices rose 26.1%, reflecting two rises in excise duty on both cigarettes and tobacco.

NZPA

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