KEY POINTS:
New Zealand's Consumers Price Index rose 0.5 per cent in the March quarter, pushed up by housing and costs associated with it, and by rising food costs.
The latest increase follows a 0.2 per cent fall in the December quarter -- the first negative inflation figure in nearly six years -- and a rise of 0.7 per cent in the three months before that.
Statistics New Zealand (SNZ) figures published today show the annual CPI rise at 2.5 per cent, down slightly from 2.6 per cent in the December quarter, and 3.5 per cent in the September quarter.
Today's figures are slightly below expectations, with the median figures in a Reuters poll of economists having been 0.6 per cent for the quarter and 2.6 per cent for the year.
This is the last major piece of data before the Reserve Bank's review of the Official Cash Rate next week. Bank Governor Alan Bollard is widely expected to hike rates again then or on June 7, or on both dates.
That would put further upward pressure on the New Zealand dollar which was hovering just a few pips below its post-float high of US74.65c shortly after the CPI data.
SNZ said the main contributions to the rise were a 1.1 per cent quarterly increase in the housing and household utilities group, and a 1.1 per cent rise in food prices.
The most significant individual factors in the quarterly rise were a 15.2 per cent rise in poultry prices, a 1 per cent rise in actual rentals for housing, while cigarettes and tobacco were up 2.8 per cent and the purchase of new housing up 1.3 per cent.
The largest individual downward pressure came from international air transport, where prices fell 7.8 per cent.
The Reserve Bank, which targets an annual inflation rate of 1-3 per cent, last month forecast that the CPI would rise 0.3 per cent from the previous quarter and 2.3 per cent from the same period a year earlier.
It raised interest rates to 7.5 per cent in March and warned that further tightening might be needed if domestic demand did not slow, particularly in the housing market.
SNZ said the March quarter rise of 1 per cent in actual rentals for housing followed rises of 0.7 per cent and 0.3 per cent in the December and September quarters respectively.
The 1.3 per cent rise in the purchase of new housing prices came after increases of 1 per cent and 2.1 per cent in the previous two quarters.
Prices for the purchase of new housing had now risen for 32 consecutive quarters.
Among respondents reporting increases in the March quarter, 93 per cent had cited higher prices for construction components, and 75 per cent cited increased sub contractors' charges.
The housing and household utilities group had increased 5.3 per cent from the March 2006 quarter to the March 2007 quarter.
The 1.1 per cent rise in the food group followed rises of 0.5 per cent and 2 per cent in the previous two quarters.
Grocery food was up 1 per cent in the March quarter, meat, poultry and fish up 2.2 per cent, non-alcoholic beverages 2.9 per cent, and restaurant meals and ready to eat food up 1 per cent.
The only downward contribution in the food group came from the fruit and vegetable subgroup which was down 1.3 per cent. Food prices were up 4 per cent for the year.
Altogether seven of the 11 groups in the CPI recorded increases in the March quarter. Among others to rise was the miscellaneous goods and services group, which lifted 1.2 per cent.
Individual upward contributions within that group included real estate services up 3.4 per cent, and jewellery and watches up 5.4 per cent, SNZ said.
Other groups to rise included education up 3.4 per cent, alcoholic beverages and tobacco up 1 per cent, and health up 1.1 per cent.
Among the groups with decreases was recreation and culture, which was down 0.7 per cent, with individual factors including audio visual equipment down 5 per cent, stationery and drawing material prices down 14.6 per cent, and computing equipment prices down 3.7 per cent.
The household contents and services group was down 1 per cent, transport down 0.2 per cent, and clothing and footwear down 0.5 per cent.
Petrol prices rose 0.8 per cent.
UBS economist Robin Clements said it was not a particularly good result from a Reserve Bank point of view.
The stinger was non-tradables inflation at 1.2 per cent -- its highest quarterly rise since 2003.
"It's not what the bank wants to see."
He suggested Dr Bollard should hike rates tomorrow week.
Deutsche Bank head of research David Plank said although the headline was a little bit better than the market was looking for, the non-tradables number, which is the key for the overall trend in inflation, had moved back above 4 per cent.
- NZPA
- NZPA
