Inflation slows in third quarter

  • 18/10/2016
Annual inflation has now held below the central bank's 1 percent-to-3 percent target range for eight consecutive quarters (iStock / file)
Annual inflation has now held below the central bank's 1 percent-to-3 percent target range for eight consecutive quarters (iStock / file)

New Zealand inflation slowed in the third quarter as a drop in transport-related prices such as vehicle relicensing fees offset higher vegetable and housing-related prices.

The consumers price index rose 0.2 percent in the three months ended September 30 for an annual increase which was also 0.2 percent, Statistics New Zealand said.

Economists had expected no change in the quarter for an annual 0.1 percent gain, while the Reserve Bank had forecast 0.1 percent for the quarter and 0.2 percent for the year.

The New Zealand dollar gained, recently trading at 71.73 US cents, from 71.32 cents ahead of the data release.

Annual inflation has now held below the central bank's 1 percent-to-3 percent target range for eight consecutive quarters, although based on its August projections it sees the rate climbing to an annual 1 percent in the final three months of 2016.

Traders have put odds of 84 percent on a cut to the official cash rate of 25 basis points on November 10, taking the bank's benchmark rate to a record low 1.75 percent.

Housing and household utility prices provided the biggest contribution to the quarterly CPI, rising 1.1 percent, driven by a 2 percent gain in new housing prices, excluding land, and a 3 percent gain in local authority rates. Vegetable prices jumped 16 percent, or a 0.5 percent gain seasonally adjusted.

Transport prices were the biggest offset, falling 3 percent in the quarter.

NZN