New Zealand consumer prices rose at a slower pace in the September quarter as more expensive vegetables and local body rates offset cheaper vehicle relicensing fees and kept the annual pace of inflation unchanged below the central bank’s target.
The consumers price index increased 0.3 per cent in the three months ended September 30, meeting the Reserve Bank’s forecast last month, and slowing from a pace of 0.4 per cent in the June quarter, Statistics NZ said. The annual pace of inflation was unchanged at 0.4 per cent, slightly ahead of the central bank’s forecast and economist expectations.
Annual inflation hasn’t been within the central bank’s one per cent-to-three per cent target range since the third quarter of last year, when it scraped in at one per cent, as a strong kiwi dollar, cheap oil and low interest rates kept a lid on consumer prices. Governor Graeme Wheeler this week said more rate cuts were likely, depending on the emerging flow of data, although he’s also wary of stoking demand in the housing market by contributing to cheaper borrowing costs.
The NZ dollar briefly jumped to as high as 68.77 US cents from 68.44 cents immediately before the figures were released, and was recently at 68.56 cents.
Vegetable prices rose 14 per cent in the quarter due to seasonally more expensive lettuce and tomatoes, and had the biggest influence in lifting inflation, followed by a 5.7 per cent increase in local body rates, with bigger-than-average hikes in the major centres.
Prices for newly built housing rose 1.6 per cent, driven by a two per cent increase in Auckland, where a booming property market has attracted tougher lending controls for investors from next month. Rental prices increased 0.6 per cent in the quarter.
“The main upward contribution came from housing-related prices,” prices senior manager, Chris Pike, said in a statement. “This was mostly influenced by higher prices for local authority rates new houses excluding land, and housing rentals.”
A 24 per cent drop in the price of vehicle relicensing fees due to Accident Compensation Corp changing the way it calculates auto levies kept a lid on inflation in the quarter, while milk, cheese and egg prices fell 2.9 per cent.
Petrol prices rose 1.6 per cent in the September quarter, with global oil prices recovering from lows earlier this year, and as the kiwi dollar depreciated. On annual basis, petrol prices fell 6.8 per cent, the biggest drag on inflation in the year, while international air fares fell 6.5 per cent, and milk, cheese and egg prices were down 5.7 per cent.
Non-tradables inflation, which covers domestic goods and services, was zero in the quarter, after rising 0.1 per cent in June and the lowest level since March 2001. The annual pace of non-tradable inflation slowed to 1.5 per cent from two per cent, its smallest increase since December 2001.
Tradables inflation rose 0.7 per cent in the quarter, slowing from a 0.9 per cent rate three months earlier. On an annual basis, prices for tradable goods fell 1.2 per cent, compared to a 1.8 per cent decline in the June year.
On a seasonally adjusted basis, the consumers price index increased 0.1 per cent in the September period, slowing from a 0.3 per cent rise in June.