Consumer prices rise 2.2%, annual rate falls to 7.2%

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Consumer prices rose 2.2% in the three months to September, due to higher food and housing prices.

But a slump in global fuel prices helped the annual rate edge down to 7.2% from a 32-year high of 7.3%.

The figures were well above expectations of a quarterly rise of 1.6% and an annual figure of 6.6%.

Food prices rose 4.1% in the quarter, due to more expensive fresh food and groceries, household expenses such as rents and rates rose 2.3%, and an increase in airfares pushed up transportation costs by 1.7%.

“The cost of building a new home has continued to rise with supply chain issues, labor costs and higher demand, all of which combine to drive prices up,” said Nicola Growden, Senior Awards Manager of Stats NZ.

On a yearly basis, food, home ownership and fuel were the main influences.

The figures showed a solid core of domestic inflation, known as non-tradables inflation, which rose 6.6% for the year, the highest since data was collected in 2002.

Commercial inflation, a measure of imported inflation, rose 8.1% on the year.

Economists said the strength in the numbers showed inflation was sticky, widespread and would be difficult to bring under control.

“The outlook for price pressure is one of thorny persistence…Today’s report will be like a red rag for an inflation-fighting bull,” Kiwibank chief economist Jarrod said. Kerr.

“The stickiness of nontradables inflation also prolongs the return to a 2% inflation rate.”

“However, domestic inflationary pressure remains well supported by the economy’s surprising resilience,” Kerr said.

Interest rate

SBA chief economist Mark Smith said the Reserve Bank may now be forced to go even further to bring inflation under control with higher hikes in the official exchange rate (OCR).

“With the RBNZ having the inflation bit between its teeth, all options will likely remain on the table.

“We have amended our OCR call to now have a 75 basis point hike in the November monetary statement, and with two 50 basis point hikes in February and April 2023.”

That would bring the OCR to 5.25%, the highest since late 2008.

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