Despite a surge in petrol prices, New Zealand's consumer price inflation sharply slowed in the September quarter, effectively dispelling market speculation about the central bank's need to raise interest rates again.
Expectations had suggested that higher fuel costs would drive consumer prices above the 6% annual rate recorded in the June quarter, possibly prompting the Reserve Bank of New Zealand (RBNZ) to consider a rate hike once more.
However, the Consumer Price Index (CPI) decreased to an annual rate of 5.6% in the quarter, despite a 16.5% surge in petrol prices during the same period.
This surge in fuel costs did contribute to a quarterly rise of 1.8%, partially offset by an increase in the cost of new vehicles.
The discontinuation of fuel tax breaks during the quarter played a role in boosting petrol prices. Rents increased by 1.2%, while food prices rose by 0.9% during the same quarter, both figures falling below the overall inflation rate for the three-month period.
Food, in fact, emerged as the primary contributor to the annual inflation rate, as reported by Statistics NZ. This was primarily driven by rising prices for ready-to-eat food, milk, cheese, eggs, as well as bread and cereals.
Over the 12 months leading up to September, ready-to-eat food prices rose by 9.4%, while milk, cheese, and eggs, along with bread and cereals, saw increases of 11.5% and 11.8%, respectively.
"Non-tradeables" inflation, which measures the changes in the prices of goods and services primarily influenced by the domestic market rather than international factors, reached 1.7% during the quarter, just below the overall inflation rate. Consequently, the annual rate of non-tradeable inflation, closely monitored by the Reserve Bank, stood at 6.3%.
Nicola Growden, the prices manager at Stats NZ, stated that prices were still rising but at lower rates compared to the previous few quarters.
