KEY POINTS:
Rising petrol prices drove New Zealand's inflation rate to a higher than expected 1 per cent in the June quarter, pushing the currency to a new record.
Figures published today by Statistics New Zealand (SNZ) showed transport prices rose 2.4 per cent in the quarter, with the main contribution from an 8 per cent increase in petrol prices.
Had petrol prices remained unchanged from the March quarter, the consumers price index (CPI) would have increased 0.6 per cent in the June quarter, SNZ said.
The rise for the latest three months took the annual CPI increase to 2 per cent, down from 2.5 per cent for the year to the March quarter.
But the fall is due to the large quarterly increase experienced in the June quarter last year dropping out of the mix.
The current rate is seen as understating the current level of inflationary pressures within the economy.
The New Zealand dollar immediately leapt on the CPI figures, from around US78.60c, to a new 22-year post-float high of US78.95c, according to Reuters data.
It then quickly eased to be around US78.80c -- the previous record set earlier this month -- by 11.45am, an hour after the CPI data was released.
The CPI figure was the final key piece of data before the Reserve Bank, which has a target range of 1 to 3 per cent, next considers official interest rates on July 26.
The median CPI forecast of economists in a Reuters poll was 0.8 per cent for the June quarter and 1.8 per cent for the year.
A theme of rising energy prices emerged from the latest data, with electricity prices also well ahead of the overall increase, up 3 per cent in the June quarter.
Along with a 1.6 per cent increase in the purchase of new housing, the electricity rise contributed to a 1.3 per cent rise in the housing and household utilities group.
Other, less significant group rises in the June quarter included health up 1.9 per cent, food up 0.5 per cent, household contents and services up 1.2 per cent, and clothing and footwear up 0.9 per cent.
The main group decrease in the June quarter was in the recreation and culture group, down 0.8 per cent, while the education group eased 0.2 per cent.
The most significant reductions in individual items were overseas package holidays, down 9.3 per cent, and apples down 35.2 per cent.
For the annual 2 per cent CPI rise, the biggest push was from housing and household utilities up 5.2 per cent, food up 4.1 per cent, alcoholic beverages and tobacco up 3.4 per cent, and health up 2.4 per cent, SNZ said.
Most significant individual items for the annual figure were the purchase of new housing up 6.1 per cent and electricity up 6.9 per cent.
Providing the most significant downward push for the year was a 3 per cent drop in the transport group, with petrol down 8.4 per cent
Had petrol prices been unchanged between the June 2006 and June 2007 quarters, the CPI would have increased 2.4 per cent, SNZ said.
For the June quarter, the non-tradable component was up 1.1 per cent, down slightly from a 1.2 per cent increase in the March quarter.
The tradable component was up 0.9 per cent, following a 0.4 per cent decrease in the March quarter.
Tradable goods and services are those that are imported or in competition with foreign goods, while non-tradables are those that that face no foreign competition.
ANZ-National Bank chief economist Cameron Bagrie said that while the non-tradable figure was "not a great" number, when housing was excluded it was a little better and so did not show as bad a picture as in the March quarter.
Goldman Sachs JBWere economist Shamubeel Eaqub said the Reserve Bank had no room to manoeuvre with non-tradables remaining sticky.
But the economy had peaked and he did not think the Reserve Bank should lift interest rates further.
- NZPA
