New Zealand Q3 inflation outpaces expectations

WELLINGTON  -New Zealand’s consumer inflation outpaced expectations in the third quarter and remains at historically high levels amid widespread price pressures.

Annual inflation rose to 7.2 percent in the third quarter, slowing from 7.3 percent in the second quarter and sits just below three-decade highs, Statistics New Zealand said in a statement on Tuesday.

The consumer price index (CPI) rose 2.2 percent quarter-on-quarter, following a 1.7 percent rise in the second quarter. The data was above economists’ expectations for a 1.6 percent rise for the quarter and a 6.7 percent annual rise, according to a Reuters poll.

The Reserve Bank of New Zealand (RBNZ) has raised interest rates to 3.5 percent from a record low 0.25 percent in October last year. It has signaled it will increase the cash rate further as it works to dampen inflation.

The New Zealand dollar rose slightly after the data showed inflation was hotter than expected.

The main drivers of the 7.2 percent annual inflation were rising prices for construction, local government taxes and rentals for housing, Statistics New Zealand said in a statement.

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

Statistics New Zealand added that annual non-tradable inflation – products made in New Zealand for domestic consumption – rose to 6.6 percent, the highest since it began tracking that data in June 2002.