NZPA

September rise in CPI boosts inflation rate

Thursday October 15, 12:01 PM

New Zealand's inflation rate rose an unexpectedly strong 1.3 percent in the September quarter, taking the annual rate to 1.7 percent.

Publishing the data today, Statistics New Zealand (SNZ) said the annual rise was the lowest in 5-1/2 years.

SNZ prices manager Chris Pike said the rise in the September quarter was driven by higher food prices and international airfares, and by levy, excise and tax rises that usually happened at this time of year.

Food prices were up 1.7 percent in the third quarter, driven by higher vegetable prices.

International air transport was up 11 percent in the same period, rising from historically low levels in the June 2009 quarter.

Vehicle relicensing fees rose 16.2 percent reflecting a rise in the ACC levy, local authority rates rose 5.6 percent, and alcoholic beverages rose 2.5 percent with higher excise duty from July.

The 1.3 percent rise in the September quarter followed rises of 0.6 percent and 0.3 percent in the June and March quarters, respectively, and a fall of 0.5 percent in the December quarter.

For the year, a big contributor to the lower annual increase came from petrol prices and airfares falling , partly offsetting higher prices for food, electricity, and local authority rates, Mr Pike said.

Transport prices fell 5.5 percent during the year with petrol down 19 percent, international air transport down 15.1 percent, and diesel down 38.8 percent.

Petrol and diesel prices peaked in July last year.

In the year to the September 2009 quarter, food prices increased 5.4 percent, accounting for well over half of the CPI annual increase of 1.7 percent. Electricity prices rose 4.5 percent and local authority rates rose 6.6 percent.

The annual inflation rate has fallen from an 18-year high of 5.1 percent in the September 2008 quarter.

The increase in the CPI was bigger than expected, with the median forecasts in a Reuters poll of economists being for a third quarter rise of 0.8 percent and annual rise of 1.2 percent.

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