Inflation has edged to a 15-month-high on the back of higher rents, rates, electricity, and food, touching the top of the Reserve Bank’s target band but unlikely to prevent further rate cuts.
Stats NZ said the consumer price index rose 1.0 percent in the three months ended September, pushing the annual rise to 3.0 percent from 2.7 percent, the highest since June last year.
The 11.3 percent rise in electricity prices was the single biggest contributor to the annual increase.
“Annual electricity increases are at their highest since the late 1980s, when there were several major reforms in the electricity market,” Stats NZ senior manager of prices Nicola Growden said.
Rates, rents, power
Domestic prices – non-tradables – remained the dominant factors for inflation, rising 1.1 percent for the quarter and by 3.5 percent for the year, the slowest increase in four years.
After electricity, rates remained the second biggest driver, up 8.8 percent on the year before. Stats NZ collects rate changes once a year and add them to inflation figures in the September quarter.
The costs of purchasing a new house rose 0.8 percent because of competitive pricing and cheaper fit-out costs.
The price of imported goods and services – tradables – rose 0.8 percent for the quarter and by 2.5 percent for the year, the highest since the end of 2023.
The imported inflation rise reflected the high prices being gained for export food such as dairy and meat, as well as more expensive overseas accommodation.
The main offsets were cheaper petrol and telecommunications equipment.
The inflation numbers were in line economists’ expectations, although they have continued to forecast the annual rate going above the Reserve Bank’s (RBNZ) 1-3 percent target band.
Various measures of underlying inflation pointed to an annual rate around 2.5 percent.
Expectations are for the RBNZ to deliver a further cut to the official cash rate next month to 2.25 percent because of the weak economy, which is also putting downward pressure on inflation.
New Zealand’s inflation rate was the same as Australia’s, above the European Union’s and the United States’, but lower than the UK’s and the OECD’s average around 4 percent.
