NZ consumer prices rise 0.4% in second quarter 18 Jul 2016
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Monday 18 July 2016 10:54 AM
NZ consumer prices rise 0.4% in second quarter, missing estimates; kiwi dollar drops
By Paul McBeth
July 18 (BusinessDesk) - New Zealand consumer prices rose less than expected in the June quarter as cheaper meat and domestic airfares offset a recovery in petrol prices, adding pressure on the Reserve Bank ahead of its unscheduled economic update on Thursday. The kiwi dollar dropped.
The consumers price index rose 0.4 percent in the three months ended June 30, accelerating from a 0.2 percent increase in the first quarter, Statistics New Zealand said. That was below the Reserve Bank's forecast for a rise of 0.6 percent. On an annual basis, inflation was 0.4 percent, its seventh quarter below the central bank's target band of 1-to-3 percent, and also below expectations.
The kiwi dollar dropped to 70.82 US cents after the figures were released at 10:45am from 71.48 cents immediately before. The trade-weighted index tumbled to 75.61 from 76.26.
Petrol prices rose 5.3 percent in the latest quarter as crude oil recovered some of last year's slump, although they were still down 8.1 percent from a year earlier. Vegetable prices were up 7.9 percent in the quarter, while new house prices rose 2.1 percent. Offsetting that, meat and poultry prices fell 2.7 percent and domestic air fares were down 9.9 percent, reflecting heightened competition on some local routes .
"Higher petrol and housing-related prices were countered by lower prices for meat and domestic air fairs," consumer prices manager Matt Haigh said in a statement.
Tradables inflation, which includes goods and services that compete with imported rivals, increased 0.6 percent, turning around a 1.2 percent drop in the first quarter, due to the pick-up in petrol prices. That would've been greater if the kiwi dollar hadn't appreciated during the period. Non-tradables inflation, which tracks domestic inflation, increased 0.3 percent, slowing from a 1 percent pace in March.
On an annual basis, tradables inflation fell 1.5 percent from a year earlier, while non-tradables were up 1.8 percent.
The New Zealand dollar has gained almost 8 percent ion a TWI basis in the past 12 months, making it difficult for the Reserve Bank to drive inflation back up within its target band while rising house prices have made governor Graeme Wheeler wary of cutting too much for fear of inflaming the property market. The bank will provide an economic assessment on Thursday, and investors expect Wheeler will use the opporunity to try to talk down the kiwi dollar, which has remained above the bank's projections and stifled imported inflation.
Today's figures show new housing continued to push up prices from a year earlier, rising 5.6 percent from a year earlier, while rental prices increased 3.3 percent. Property maintenance prices rose 2.9 percent and local body rates increased 6.2 percent. Electricity prices rose 2 percent from June 2015.
That continued to spill over into housing related items, with furniture and furnishing prices rising 4.9 percent from a year earlier, and carpets and other floor coverings up 4.9 percent, whiile major household appliance prices increased 0.9 percent. Real estate services climbed 10 percent from a year earlier.
Lower transport prices offset the increase in annual inflation as cheaper petrol was accompanied by a 3.1 percent fall in the price of new cars, a reduction in car licensing fees pushed down prices for other private transport services 23 percent, and domestic and international air fares fell 6.9 percent and 3.8 percent.
Food prices were unchanged from a year earlier as more expensive fruit and vegetables were offset cheaper dairy products dragging down grocery prices by 2.3 percent.
Seasonally adjusted CPI slowed to a 0.2 percent increase in the June quarter from 0.3 percent in March. Seasonally adjusted tradables inflation increased 0.2 percent, turning around a 0.5 percent fall in the prior quarter, while the pace of non-tradables inflation was unchanged at 0.5 percent.
(BusinessDesk)
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