CPI rose 0.2 per cent in the three months ending March, reversing the previous quarter’s decline of 0.5 per cent. That took the annual inflation rate to 0.4 per cent, Statistics New Zealand reported.
Westpac economists said the results were slightly stronger than their forecast, which was also the market median forecast. Inflation was in line with the RBNZ’s forecast.
“Higher prices for cigarettes, food, and housing-related costs were countered by lower prices for petrol and air fares,” said consumer prices manager Matt Haigh.
Cigarette and tobacco prices showed the highest upward contribution, up 9.4 percent in the March 2016 quarter following an increase in excise duty in January.
“The average price of a pack of 25 cigarettes was $28.79 in the March 2016 quarter, more than double the price from six years ago when annual 10 per cent excise tax increases were introduced,” Haigh said.
Excluding cigarettes and tobacco, the CPI showed a decrease of 0.1 per cent in the March 2016 quarter.
Petrol prices, which showed a decline of 7.7 per cent, made the largest downward contribution for the quarter. The average price of one litre of 91 octane petrol fell to $1.69 in the March 2016 quarter, compared with $1.84 in the previous quarter.