- New Zealand inflation has hit a 30-year high of 6.9 per cent as consumer prices soar, according to the latest data from Stats NZ
- The rise in New Zealand’s Consumer Price Index marks the largest annual increase in prices since the year to June 1990
- Stats NZ said major increases in housing construction prices, as well as all-time high petrol prices, drove the high inflation
- Still, the inflation data was not as bad as analysts feared, and New Zealand’s dollar retreated slightly following the release of the price stats
- The inflation data comes after New Zealand’s central bank lifted interest rates by 50 basis points to 1.5 per cent last Wednesday — its fourth rates hike in a row
New Zealand inflation has hit a 30-year high of 6.9 per cent as consumer prices soar, according to the latest data from Stats NZ.
The Consumer Price Index (CPI) increase marks the largest annual rise in prices since the year to June 1990, when prices rose by 7.6 per cent.
New Zealand’s CPI rose 1.8 per cent in the March 2022 quarter compared to the December 2021 quarter.
While petrol prices were cited as the main driver of the quarter-on-quarter rise, Stats NZ said the housing and household utilities group drove the year-on-year rise, broadly influenced by soaring prices of housing construction and rentals.
Still, it seems despite the three-decade high, inflation was still not as severe as analysts feared, with the New Zealand dollar retreating slightly following the release of the price data.
The inflation data comes after New Zealand’s central bank lifted interest rates by 50 basis points to 1.5 per cent last Wednesday — its fourth rates hike in a row. The Reserve Bank of New Zealand (RBNZ) signalled that further increases would be needed to get ahead of inflation.
The fact that inflation did not exceed market expectations slightly softens expectations that the central bank will again increase rates by 50 basis points next month.
Construction and fuel prices causing strife
Stats NZ senior prices manager Aaron Beck said the price for the construction of new dwellings increased by 18 per cent in the March 2022 quarter compared to the March 2021 quarter — the highest year-on-year increase since New Zealand first started recording the construction data in 1985.
“Construction firms have been experiencing many supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building a new house,” Mr Beck said.
Similarly, a 32 per cent year-on-year increase in petrol prices also marked the highest rise since 1985, putting even more pressure on consumers.
“This domestic inflation is the kind that doesn’t go away quickly,” ANZ Bank economists said in a research note, according to Reuters.
“This continued rise in domestic inflation pressures only reinforces the need for ongoing interest rate rises by the RBNZ.”
Global supply issues continue to impact the prices of commodities and goods around the world, with heavy sanctions against Russia for its invasion of Ukraine playing a large role in the soaring price of petrol.
Last month, New Zealand slashed its fuel tax by 25 cents a litre to help combat the rising costs of living. Australia followed suit with a similar move two weeks later.
The New Zealand dollar is currently down 0.21 per cent and buying 67.93 US cents.