Housing, petrol and electricity prices push CPI up 0.8pc

11.00am

The Consumers Price Index (CPI) rose 0.8 per cent in the June quarter thanks to a surge in the prices of houses, petrol and electricity, Statistics New Zealand said today.

The rise was marginally lower than the average 0.9 per cent increase predicted by economists in a Reuters poll.

It followed a rise of 0.4 per cent in the three months to March 31, and a 0.7 per cent increase in the December quarter.

Year on year, the CPI rose 2.4 per cent, which was in line with the economists' predictions.

The Reserve Bank (RBNZ) picked CPI inflation for the quarter to grow by 0.9 per cent, and the 0.8 per cent quarterly rise is unlikely to dissuade it from lifting the official cash rate (OCR) from its current 5.75 per cent.

Economists expect the RBNZ to lift the OCR by 25 basis points to 6.0 per cent later this month in a move to combat inflation, which has been driven by the surging economy.

In relation to the June quarter CPI figures, government statistician Brian Pink said the housing group made the "most significant upward contributions", with prices rising 1.4 per cent.

"The rise in the housing group... was mainly due to higher prices for the purchase and construction of new dwellings, which increased 1.9 per cent and are now 8.8 per cent higher than a year ago," he said in a statement.

Construction prices have increased for 21 consecutive quarters.

Rises in the price of construction components, fittings, subcontractors' charges, and labour were factors, respondents to the survey said.

"If prices for the purchase and construction of new dwellings had remained unchanged from the March 2004 quarter, then the all-groups CPI would have increased by 0.6 per cent (in the June quarter)," Mr Pink said.

The increased June quarter CPI could also be linked to higher prices for petrol and electricity.

Transportation prices rose 1.4 per cent in the quarter, driven by a 7.8 per cent spike in petrol prices. Petrol prices were up 19.1 per cent from the same time last year.

The cost of operating a household also rose, up 0.6 per cent because of higher electricity prices (up 2.8 per cent).

Electricity prices were now 10.4 per cent higher than they were a year ago, although the cost of appliances was down 1.9 per cent.

Mr Pink also noted that rises were partly offset by lower prices for international air travel, which was down 21.2 per cent on last year.

In other groups, the cost of personal and health care rose 0.8 per cent in the three months to June, bolstered by higher prices for medical and health services (up 1.1 per cent) and medical specialist services (up 1.1 per cent).

Meanwhile, the Food Price Index for June fell 0.1 per cent.

"Lower prices for grocery food, soft drinks and confectionery; and fruit and vegetables were partly offset by higher prices for restaurant meals and ready-to-eat food; and meat, fish and poultry," Mr Pink said.

Grocery food, soft drinks and confectionery prices were down 0.4 per cent, while those for fruit and vegetables fell 0.9 per cent.

Restaurant meals and ready-to-eat food prices rose 0.6 per cent, while meat, fish, and poultry prices were up 0.1 per cent.

- NZPA