New Zealand’s annual consumer price index (CPI) hit a three-decade high in the first quarter, rising to 6.9% from 5.9% in the previous quarter, the fastest rate since a 7.6% annual increase in the year to the June quarter of 1990.
Statistics New Zealand said on Thursday that CPI rose 1.8% in the quarter ending March from a 1.4% rise in the fourth quarter. The data was below economists’ expectations in a Reuters poll for a 2.0% rise for the quarter, with an annual rise of 7.1%.
Rising prices for food, construction and housing is fuelling surging inflation, the agency said.
Prices for the construction of new dwellings increased 18% in the March 2022 quarter compared with the March 2021 quarter, the largest increase recorded since the series began in 1985.
“Construction firms have been experiencing many supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building a new house,” senior prices manager Aaron Beck said.
The New Zealand dollar eased 0.4% to $0.6772 , from $0.6804 just before the data hit dealing screens. Two-year swap rates dipped as much as six basis points to 3.52% as the market reconsidered the chance of another half-point rate hike.
The Reserve Bank of New Zealand, which met last week, has been vocal about its concern around inflation expectations in New Zealand and the need to get out ahead of it.
The central bank has increased the cash rate at four consecutive meetings and signalled there will be further increases in coming quarters.
- Reuters, with additional editing by George Russell
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