The consumer prices index rose 3.4 percent in the year ended March 31 after gaining 3.2 percent in December, Statistics New Zealand said in Wellington today. The median estimate of 12 economists surveyed by Bloomberg News was for 3.5 percent. In the quarter, prices rose 0.7 percent.
Bollard, who is required to keep annual price increases between 1 percent and 3 percent, said last month rising gasoline and food costs may keep inflation above his target until mid-2009. Nine of 12 economists surveyed by Bloomberg News say he will keep the benchmark interest rate at 8.25 percent until at least Sept. 30.
New Zealand's dollar bought to 79.12 U.S. cents at 11:25 a.m. in Wellington from 79.17 cents immediately before the report.
Bollard on March 6 forecast price increases will accelerate to 3.7 percent in the year ending Sept. 30, and won't drop below percent until June 2009. He said borrowing costs needed to stay high ``for a significant time yet'' to ensure inflation falls back toward the middle of his target range.
Bollard, who forecast prices rose 0.7 percent in the quarter after gaining 1.2 percent in the three months to December, concentrates on so-called non-tradable inflation, a core measure of the price of goods that are not influenced by currency fluctuations and fuel.
Non-tradable prices rose 1.1 percent from the fourth quarter when they gained 0.7 percent, and increased 3.5 percent from a year earlier. Economists expected 3.4 percent.
Bollard is under pressure from exporters and home-owners to cut interest rates as drought, international credit turmoil and a slump in the housing market weigh on consumer spending and threaten to stall economic growth.
Finance Minister Michael Cullen said last month he couldn't rule out the possibility of a recession this year. Consumer confidence fell to a 10-year low in the first quarter and business confidence was the weakest since 1975, two separate surveys showed. House sales in March plunged 53 percent to a seven-year low, the Real Estate Institute said on April 11.
Fuel and food prices and the cost of owning a home made the biggest contributions to first-quarter inflation, the statistics agency said.
Gasoline prices rose 4 percent in the quarter and 21 percent from a year earlier. Excluding gasoline, consumer prices gained 0.5 percent in the quarter and 2.5 percent over the year, the agency said.
Food prices rose 1.8 percent led by a 19 percent jump in cheese prices and more expensive bread, butter and cereals. Food increased 5.1 percent from a year earlier.
Rising electricity, gas and waste disposal charges led to an increase in the cost of owning a home. Rentals rose for the 27th straight quarter. The cost of buying and building a new house gained 0.9 percent, the lowest since September 2002.
Domestic airfares fell 4.4 percent and international fares dropped 8.6 percent. The price of new cars, appliances, computers and overseas holidays also declined as a rising currency curbed the cost of imports.