New Zealand consumer prices rose at their fastest annual pace in two-and-a-half years in the final three months of 2016 as a recovery in global oil prices pushed up the cost of petrol, and the nation's bubbling property market continued to drive up house prices. The kiwi dollar rose above 73 US cents.
The consumers price index rose 0.4 per cent in the three months ended December 31 for an annual pace of 1.3 per cent, Statistics New Zealand said. That was the fastest annual pace since June 2014 and the first time headline inflation has been within the Reserve Bank's target band of 1-to-3 per cent in two years. Economists had been picking quarterly inflation of 0.2 per cent for an annual pace of 1.2 per cent.
Petrol prices rose 4.1 per cent in the quarter, reducing the annual decline to 0.5 per cent. A slump in oil prices and resilient New Zealand dollar has kept a lid on headline CPI as households benefited from cheaper imports and lower transport costs, though the turnaround in energy costs heightened expectations for inflationary pressures to emerge.
"This is the first time in over two years that price increases for household purchases have been over 1 percent," Statistics NZ prices senior manager Jason Attewell said. "Household price inflation is up from a historical low of 0.1 per cent for the December 2015 year."
The New Zealand dollar rose to 73.03 US cents from 72.70 cents immediately before the data was released. The trade-weighted index rose to 79.68 from 79.34, while the kiwi rose to 96.31 Australian cents from 95.96 cents.