Consumer prices rose 3 percent in the year ended March 31, Statistics New Zealand said in Wellington today. Inflation slowed from 3.4 percent in the year to December and matched the median estimate in a Bloomberg News survey of nine economists. From the fourth quarter, prices rose 0.3 percent.
Inflation is easing amid a domestic recession, which began in the first quarter of last year, and as a deepening global slowdown lowers commodity prices. Reserve Bank Governor Alan Bollard has cut the official cash rate by 5.25 percentage points since July to a record low.
For the first time in 10 years, most companies cut prices in the first quarter, according to a survey by the New Zealand Institute of Economic Research. More firms expected to lower prices in the second quarter.
Inflation is slowing after reaching an 18-year high of 5.1 percent in the year ended Sept. 30, 2008, amid soaring fuel, food and air travel costs.
Fuel prices are now falling. Diesel prices dropped 19 percent and gasoline prices declined 1 percent from the fourth quarter, the statistics agency said today. International airfares fell 17 percent and overseas package holidays were also cheaper.
The rising cost of food made the biggest contribution to inflation in the quarter, the agency said. Food prices rose 1.2 percent, led by fruit, bread and soft-drinks. Excluding food, consumer prices would have been unchanged.
Non-tradable prices rose 0.7 percent from the fourth quarter, the smallest gain in five quarters. The measure gained 3.8 percent from a year earlier, after rising 4.3 percent in the year to December.
Non-tradables inflation was led by rising rents and power prices. Tobacco prices were buoyed by a rise in taxes and the cost of university education also increased.
Prices associated with owning a home posted the smallest increase in almost eight years. The cost of buying and building a new house was unchanged from the fourth quarter. Local council land taxes were also unchanged.
Tradable prices fell 0.4 percent from the fourth quarter, when they tumbled 2.1 percent.