New Zealand Inflation Rises Less Than Expected


New Zealand inflation accelerated less than expected in the first quarter, suggesting there's less need for Reserve Bank Governor Alan Bollard to rush to raise interest rates this year.

The Consumers Price Index rose 0.4 percent in the three months ended March 31, for an annual pace of 2 percent, according to Statistics New Zealand.

The inflation figures may have a bearing on Bollard's review of monetary policy next week, when he is expected to keep the official cash rate at a record low 2.5 percent while providing further hints to the timing of any eventual hike.

Non-tradable inflation was 0.5 percent in the first quarter, milder than the 0.6 percent pace the central bank had expected, which may provide some comfort over price increases in the domestic economy. Tradable inflation was just 0.1 percent.

Food and fuel prices drove up the CPI in the latest quarter, according to the government statistician. Food rose 1 percent, led by higher prices of groceries, while transport prices gained 1.1 percent on more-expensive petrol.

Also among the six industry groups to record an increase, education rose 4.8 percent, liquor and tobacco rose 1.3 percent, health gained 0.9 percent and housing and household utilities rose 0.3 percent.

The biggest individual items were a 6.9 percent gain in the price of petrol, a 6 percent increase in fresh milk and a 6.1 percent gain in university fees.

Among the five declining groups, recreation and culture fell 1.4 percent. The biggest individual contribution to lower prices came from an 8.3 percent decline in international air transport prices, the report shows.

 


TradingEconomics.com, Stuff.co.nz
4/20/2010 9:55:05 AM