There was a surprise move in the non-tradables (domestic) inflation component, increasing to 6.6 per cent and ahead of the market expectation of 6.4 per cent and Reserve Bank’s 6.3 per cent.
Tradable (imported) inflation was 5.2 per cent, down from 6.4 per cent, and benefiting from an unexpected sharp fall in international airfares.
ANZ Research said the data showed risks to the inflation outlook remained firmly on the upside.
The market is pricing in an 80 per cent chance of a 25 basis points increase in the official cash rate (to 5.75 per cent) by the end of the year.
David McConnochie, investment adviser with Forsyth Barr, said the latest inflation rate was a touch higher than the market expected, driven by the rise in food prices.
“Inflation has come down steadily and that’s positive for future market certainty,” he said. “Non-tradable inflation is a little higher than we would like, and food and wage inflation are sticking points.
“We believe the Reserve Bank will put up with the noise and stay the course with a (peak) 5.5 per cent OCR.”
New Zealand wholesale (swap) rates increased 10 basis points after the CPI release, and the NZ dollar went through the US63c mark against the American greenback before falling back to US62.54c.
Fisher and Paykel Healthcare was up 55c or 2.27 per cent to $24.75; Mercury Energy gained 7c to $6.40; Restaurant Brands collected 10c to $6.45; Comvita added 8c or 2.56 per cent to $3.20; and Tourism Holdings increased 8c or 2.31 per cent to $3.55.
Leading banks ANZ and Westpac added 52c or 1.93 per cent to $27.47 and 39c to $23.84 respectively.
Ventia Services Group rose 20c or 6.33 per cent to a new high of $3.36 on the news that it will be added to the S&P/ASX 200 Index next week, replacing Blackmores which has been bought by Kirin Holdings.
Channel Infrastructure, up 3c or 1.85 per cent to $1.65, increased throughput at its Marsden Point fuel import terminal by 10 million litres to 821 million litres in the second quarter, driven by strong aviation demand. Total throughput was 1.63 billion litres for the six months ending June.
Channel has completed decommissioning the oil refinery with conversion costs of $170m to the end of June - remaining within budget - including $30m of private storage costs.
Precinct Properties, increasing 3c or 2.38 per cent to $1.29, told the market that the sale of 40 and 44 Bowen Street in Wellington has gone unconditional. Argosy Property, down 1c to $1.16, has extended its syndicated banking facilities by $50m to $525m.
Other gainers were Vista Group up 6c or 3.28 per cent to $1.89; 2 Cheap Cars increasing 3c or 4.84 per cent to 65c; Move Logistics adding 2c or 2.47 per cent to 83c; PGG Wrightson up 11c or 2.7 per cent to $4.19; and Vital improving 2.5c or 11.11 per cent to 25c.
Meridian Energy was down 8c to $5.38; Contact shed 10c to $8.08; Freightways declined 15c to $8.50; Port of Tauranga decreased 10c to $6.18; Chorus fell 14.5c to $8.30; and Summerset Group was down 7c to $10.30.
Winton Land fell 9c or 4.21 per cent to $2.05; Delegat Group was down 14c to $8.62; NZ Oil & Gas declined 1.5c or 3.8 per cent to 38c; My Food Bag decreased 1.5c or 6.25 per cent to 22.5c; and Black Pearl Group shed 3c or 5 per cent to 57c.
Vulcan Steel continued to fall following its earnings downgrade, declining 39c or 4.53 per cent to $8.21.
Tower declined 2.5c or 4.03 per cent to 59.5c after downgrading its full-year net profit guidance to between a loss of $2m and gain of $3m, from the previous $8m-$13m profit. Gross written premiums were up 16.5 per cent to $385m at the end of the third quarter.
Tower said inflation, motor crime and supply chain issues continued to worsen over the third quarter, with the average cost of motor claims increasing by 20 per cent and premiums have risen 26 per cent over the past year.
Large events costs are now $39.5m, leaving $10.5m of Tower’s $50m allowance for the remainder of the year to September 30. Tower has now settled more than 50 per cent of the claims from January’s Upper North Island flooding and Cyclone Gabrielle.
