New Zealand's annual inflation slows to 6.7 percent, still fastest pace since 1990s

New Zealand's annual inflation rate fell to 6.7 percent in March, still more than double the Reserve Bank's target, new data shows.

Analysts had expected the annual rate of inflation to remain around the 7 percent mark in March after the consumer price index (CPI) came in at 7.2 percent in December.

"Inflation is still at levels not seen since the 1990s," said Nicola Growden, Statistics NZ's consumer prices senior manager.

Quarter-on-quarter, the CPI was up 1.2 percent - also lower than forecasts.

Food prices gained 11.3 percent in March on an annual basis, up from 11 percent in December. Construction costs also rose 11 percent in the year to March.

At its second 2023 rate review earlier this month, the RBNZ remained aggressive with its policy - setting the official cash rate higher than the market expected. 

Economic demand was still outpacing supply "and this continues to be reflected in persistently high domestic inflation", the RBNZ said in its April 5 monetary policy statement.

Infometrics chief executive Brad Olsen noted Wednesday's figures were better than expected.

Olsen. Photo credit: AM

"Fuel prices falling have contributed to this moderation, with petrol prices down 8.3 percent from a year ago," he said. "That's encouraging news and shows that the intense inflationary pressures we've been seeing are starting to be dampened just a bit."

But 6.7 percent was still "too high", Olsen said.

Grocery store-bought food accelerated by 12.3 percent in the year to March, rising from 10 percent in the 12 months to December. Excluding food, consumer prices rose 5.6 percent compared with a 6.4 percent rise in the previous quarter.

Housing and household utilities rose 7.1 percent annually in March. Contributing to this was a 7.2 percent surge in property rates.

New Zealand, however, was "on the right path", Olsen said - given the declining annual figure.