Although down 7.4 per cent, an 8.8 per cent increase in fuel costs in the June quarter contributed to a 0.4 per cent rise in the Consumer Price Index. Photo / John Stone
Although down 7.4 per cent, an 8.8 per cent increase in fuel costs in the June quarter contributed to a 0.4 per cent rise in the Consumer Price Index. Photo / John Stone
An 8.8 per cent quarterly rise in the cost of pertol lifted what would otherwise be a flat Consumers Price Index, new Statistics New Zealand figures show.
Consumer prices rose in the second three months of the year as a weaker currency and higher global oil prices lifted the cost of petrol, and housing continued to get more expensive.
The consumers price index rose 0.4 per cent in the three months ended June 30, turning around two quarters of deflation.
That was in line with the Reserve Bank's forecast in its June monetary policy statement, though below the 0.6 percent increase predicted in a Reuters poll of economists.
Annual inflation rose at a 0.3 per cent pace, accelerating from the 0.1 per cent yearly increase three months earlier, though still below the central bank's target band of between 1 per cent and 3 per cent.
The New Zealand dollar fell to a fresh five-year low of 65.61 US cents following the release of the data.
The local currency was recently trading at 65.70 US cents from 65.96 cents immediately before the 10:45am release
A rebound in petrol prices underpinned the quarterly gain, with fuel prices up 8.8 per cent in the three month period.
On an annual basis, petrol prices were down 7.4 per cent.
"The main impact came from higher petrol prices, which were up 8.8 per cent in the June quarter," Statistics NZ prices manager Chris Pike said in a statement.
"Without petrol, the CPI was flat for the quarter."
Cheap oil and a persistently strong New Zealand dollar has hindered economists' forecasts for inflation, and surprised the central bank over the past year.
The low level of inflation and a deterioration in the nation's terms of trade prompted Reserve Bank governor Graeme Wheeler to start cutting interest rates last month, and the bank is expected to lower the official cash rate to 3 per cent at next week's meeting.
Without petrol an 8.8 per cent rise in the cost of petrol, the CPI was flat for the June quarter. Photo / Natalie Slade
Tradable inflation, which covers goods and services with international competition, rose 1 per cent in the June quarter, its biggest quarterly increase since September 2013, taking the annual decline to 2 per cent.
Non-tradable inflation rose at a 0.1 per cent pace in the quarter, its smallest quarterly rise since December 2009, for a 2 per cent annual increase, the lowest since December 2001.
Statistics New Zealand launched seasonal adjustments to the CPI series today, which showed consumer prices rose 0.3 percent in the quarter.
Tradable inflation rose 0.6 per cent on a seasonally adjusted basis, and non-tradable inflation increased 0.3 per cent.
The September and December quarters are where the department has seen the greatest variation in historical data, with September prices typically lower by about 0.25 of a percentage point, and December prices higher by about 0.4 of a percentage point.
Housing related prices contributed to the quarterly increase in inflation, with a 1.5 per cent rise in the cost of new housing and a 0.6 per cent increase in rentals.
New housing prices rose 5.3 per cent in the year ended June 30, while rental prices advanced 2.3 per cent.
New Zealand is going through a construction boom with the Canterbury rebuild peaking earlier this year, and Auckland activity trying to catch up with a shortfall in supply.
Auckland's supply imbalance led to a surge in house sale prices in the country's biggest city, and has been a thorn in the central bank's side, which it sees a the biggest threat to the nation's financial stability.
In May, the Reserve Bank unveiled plans to impose lending restrictions targeting Auckland property investors, which it says have been driving activity in recent months.
Cheaper domestic airfares fell in the quarter, down 13 per cent, while fruit prices dropped 8.7 per cent.
Food prices, which make up about a fifth of the CPI basket, fell 0.1 per cent in the quarter, for an annual increase of 0.2 per cent.
Grocery food prices dropped 0.4 per cent in the three month period, for a 1.7 per cent annual decline.
Household electricity prices rose 0.6 per cent in the quarter, and were unchanged on an annual basis, while gas prices fell 0.4 per cent in the June period, and were 0.9 per cent on the year.
