New Zealand inflation has hit a three decade high, driven by both external and domestic forces, according to Statistics New Zealand:
The consumers price index increased 5.9 percent from the December 2020 quarter to the December 2021 quarter, the biggest movement since a 7.6 percent annual increase in the year to the June 1990 quarter, Stats NZ said today.
This 7.6 percent increase occurred shortly after the Reserve Bank of New Zealand Act 1989. The Act came into effect in February 1990 to target the high inflation from the previous decade and maintain stability in the general level of prices over the medium term.
“New Zealand is not alone, with many other OECD countries experiencing higher inflation than in recent decades,” consumers prices senior manager Aaron Beck said.
“Price increases were widespread with 10 out of 11 main groups in the CPI basket increasing in the year, with only the communications group decreasing,” Mr Beck said.
The main driver for annual inflation was the housing and household utilities group, with prices for construction and rentals for housing increasing in the year to the December 2021 quarter.
Prices for construction of new dwellings increased 16 percent in the December 2021 quarter compared with the December 2020 quarter.
“Construction firms have been experiencing supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building new houses,” Mr Beck said…
The next largest contribution to annual inflation was from the transport group, with increased prices for petrol and second-hand cars.
Petrol prices increased 30 percent in the year to December 2021 quarter. The average price of 1 litre of 91 octane petrol was $2.45 compared with $1.87 per litre in the December 2020 quarter…
Domestic, or non-tradable inflation, was 5.3 percent in the year to the December 2021 quarter.
Higher prices for the purchase of housing, rentals for housing, and local authority rates were partly offset by telecommunications services.
Non-tradable inflation measures goods and services that do not face foreign competition. It shows how domestic demand and supply conditions are affecting consumer prices.
The RBNZ has already increased the official cash rate twice to 0.75%, and is due to be next reviewed on 23 February.
This data will give the RBNZ plenty of ammunition to keep lifting interest rates.