Bargain deals a hit with travellers

Increasing competition among airlines and other travel providers has seen an increase in Hawke's Bay residents travelling far and wide. Photo / NZME.

New airlines, new flight routes and lower costs are motivating more and more Hawke's Bay residents to travel, a leading Napier travel agent says.

The latest consumers price index (CPI) showed a 3.5 per cent decrease in the price of holiday packages in the three months to December 2014 compared with the same quarter the previous year.

Petrol was another major downward contributor, with a 4 per cent decrease in price. Transport-related costs, most household contents and the cost of clothing and footwear also fell, despite a 0.8 per cent increase in CPI overall.

Jennings United Travel Napier owner Stephen Jennings said increasing competition among airlines and other travel providers had brought prices down. "There's certainly been some exceptional deals in the last three or four months.

"Fuel prices are down, people have paid back a bit of debt after the global financial crisis and there's a general feel of greater consumer confidence."

Mr Jennings expected the increased activity to continue this year as the market continued to grow.

"There's lots of events on this year. The Rugby World Cup will make it more difficult to get seats -- which a lot of people don't think about.

"We're also seeing families travelling further and more couples travelling together. South America will become more popular when it's added to Air New Zealand's routes and places like India and Sri Lanka are picking up."

The overall 0.8 CPI increase fell below the Reserve Bank's targeted 1-3 per cent band. According to Statistics New Zealand, flat prices in the previous quarter slowed the inflation rate.

Cigarettes and tobacco prices had the greatest yearly increase -- up 11.9 per cent. The prices were affected by a 10 per cent tax increase in January, which brought the average price of a pack of 20 cigarettes to $17.20.

A further 10 per cent tax was added at the start of 2015, pushing the average price to about $20.

Other notable increases were the cost of newly built houses (up 5.4 per cent), rental properties (2.1 per cent) and electricity (3.6 per cent).

Health and education-related costs and the majority of food costs also increased slightly.

AMP Capital Investors senior portfolio manager Warren Potter said the falling oil price was expected to have more of an impact on petrol costs in the first three months of this year.

Bank of New Zealand(BNZ) economists have also tipped New Zealand to report two quarters of deflation -- the first six-month period of falling consumer prices since 1998/99.

BNZ economists were not especially concerned about the wider ramifications on the economy however, as growth is expected at a faster rate than developed nation peers this year.