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- New Zealand’s Consumer Price Index (CPI) rose 2.2 per cent in the third quarter of this year, representing the largest quarterly jump in over 10 years
- The increase compares to a rise of 1.3 per cent in the second quarter, according to Statistics New Zealand
- Primary drivers included housing-related costs, like the construction of new houses, as well as vegetable prices, transport costs and fuel prices
- The New Zealand dollar also jumped, touching $0.7103 per US dollar, as traders braced for a tightening of monetary policy by the central bank
New Zealand’s Consumer Price Index (CPI) rose 2.2 per cent in the third quarter of this year, according to data released on Monday, beating expectations and soaring at the fastest pace in more than a decade.
The increase compares to a rise of 1.3 per cent in the second quarter, Statistics New Zealand said in a statement — the biggest quarterly jump since a 2.3 per cent increase in the December quarter of 2010.
Annual inflation also jumped 4.9 per cent, compared to 3.3 per cent in the previous quarter, also representing the biggest annual movement in more than 10 years.
The data beat both analysts’ expectations in a recent poll by Reuters and forecasts by the Reserve Bank of New Zealand (RBNZ), both of which expected quarterly inflation to rise 1.4 per cent, which would have lifted annual inflation to 4.1 per cent.
The primary drivers, Statistics New Zealand said, were housing-related costs such as the construction of new houses and local authority rates.
Vegetable prices came in as the second-largest contributor, along with transport costs and fuel prices.
The New Zealand dollar also jumped, touching $0.7103 per US dollar, as traders braced for a tightening of monetary policy by the central bank in response to the higher inflation.
The RBNZ hiked rates earlier this month, hinting at further tightening in the future as it aims to keep inflation within the target range of between one and three per cent, and to cool a red-hot housing market.
“We had already expected the RBNZ to continue hiking rates despite the Auckland lockdown,” Ben Udy, an economist at Capital Economics.
Auckland, New Zealand’s largest city has been in lockdown since mid-August in an attempt to stamp out an outbreak of the COVID-19 Delta variant.
“But the strength in consumer prices in Q3 will surely nudge the Bank towards an even more aggressive hiking cycle,” Mr Udy added.
