Annual inflation edges up to 1.5%
Prices rose 0.8 per cent in the three months to the end of last month.
The quarterly inflation figure reported by Stats NZ was up from 0.5 per cent in the December quarter and in line with banks’ expectations, but shy of the Reserve Bank’s 1 per cent forecast.
It leaves annual inflation marginally higher at 1.5 per cent, versus 1.4 per cent for the year to the end of December.
That small change appears unlikely to settle growing debate over whether rising prices could knock the Reserve Bank and other central banks around the world off course later this year in their general intent to keep interest rates ‘‘lower for longer’’.
ASB said it expected annual headline inflation to move above 2 per cent for much of the rest of this year and next year as ‘‘a perfect storm of stretched capacity, supply bottlenecks and higher costs flow through in consumer prices’’.
For now, it expected the Reserve Bank to ‘‘remain patient’’ and hold off raising the Official Cash Rate until later next year, it said.
Some of the inputs into last month’s quarter inflation figure could be dismissed as more likely to be temporary.
Transport costs jumped 3.9 per cent, which was the biggest quarterly rise in more than 10 years.
Stats NZ senior manager Aaron Beck attributed that to a recovery in oil prices, which lifted petrol prices by 7.2 per cent. By the end of the quarter, petrol prices were 3.3 per cent higher than the average over the quarter, suggesting the possibility of more pain to come.
Used car prices also jumped 4.4 per cent in the quarter.
‘‘There have been many delays with imports of goods into New Zealand,’’ Beck said. ‘‘This may have resulted in fewer cars being available for sale.’’
But other factors that contributed to the higher inflation rate may be of more concern.
Rents rose 1 per cent during the quarter, the biggest rise in a year, with annual rent rises sitting at 2.7 per cent. Rent increases were particularly prevalent in Wellington, which saw a quarterly increase of 1.7 per cent.
The average cost of building a new house also rose 1.2 per cent in the quarter.
‘‘Reported shortages of many building materials such as timber and house fittings and furnishings, as well as higher labour costs, likely contributed to the movement,’’ Beck said.
Infometrics economist Brad Olsen said the data showed that household budgets would be ‘‘getting stretched by higher housing and transport costs’’.
‘‘Higher costs to keep a roof over your head – even before the Government’s recent housing announcement – will continue to put pressure on households, with those on lower incomes growing increasingly concerned about how to make ends meet,’’ he said.
The cost of buying houses other than new homes, and land, is not factored into the inflation figures.
Food prices rose 0.6 per cent in the quarter – below the average inflation rate – while the like-forlike prices of consumer items including smartphones, televisions and furniture fell, in keeping with a longer term trend.
But there have been concerns that an emerging global shortage of computer chips could feed through into price rises for a wide range of goods over the next 12 months.
Consumer NZ yesterday warned people to also expect their power bills to rise following a surge in spot market electricity prices over the past few months.
‘‘It’s increasingly likely that prices will rise over winter. We’ve already seen a jump in pricing with some energy companies in March,’’ Consumer NZ chief executive Jon Duffy said.
Stats NZ collates its inflation numbers through a mix of methods including automated means – such as point-of-sale data supplied directly by supermarkets – and through online and field surveys.