New Zealand inflation in third quarter remains high after pricing pressure

• Consumer inflation in New Zealand exceeded predictions and remained at historically high levels.
• The annual inflation rate increased to 7.2% in the third quarter, down from 7.3% in the second quarter.
• The Reserve Bank of New Zealand hiked interest rates to 3.50 percent in October 2017.

In the third quarter, consumer inflation in New Zealand exceeded predictions and remained at historically high levels due to widespread pricing pressures.

The annual inflation rate increased to 7.2% in the third quarter, down from 7.3% in the second quarter, according to a statement released by Statistics New Zealand on Tuesday.

After an increase of 1.7% in the second quarter, the consumer price index (CPI) increased by 2.2% in the third. The statistics exceeded economists’ forecasts for a quarterly increase of 1.6% and an annual increase of 6.7%, according to a Reuters poll.

The Reserve Bank of New Zealand (RBNZ) hiked interest rates to 3.50 percent from a record low of 0.25 percent in October 2017. As part of its efforts to combat inflation, it has signaled it will hike the cash rate further.

The New Zealand currency increased little after data revealed that inflation was higher than anticipated.

According to a statement from Statistics New Zealand, the price increases for construction, local government taxes, and housing rentals were the primary contributors to the 7.2% annual inflation rate.

Nicola Growden, senior manager of pricing at Statistics New Zealand, stated, “The cost to construct a new house has continued to rise with supply-chain issues, labor costs, and higher demand, all of which combine to push up prices.”

Statistics New Zealand stated that annual non-tradable inflation – products created in New Zealand for domestic consumption – increased to 6.6%, the highest level since June 2002, when the agency began tracking this data.

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