New Zealand’s inflation increased more than 1 per cent in the second quarter amid the rising petrol prices.
Statistics New Zealand’s published data shows that petrol prices increased by 8 per cent, which lifted country’s transport prices by 2.4 per cent in the quarter. Petrol prices remained unchanged since the March quarter.
Apart from the petrol prices, electricity prices were also, well ahead of the overall increase, up by 3 per cent in the quarter. Whereas food prices shot up by 0.5 per cent, health recorded 1.9 percent upsurge, household contents and services 1.2 per cent, and clothing and footwear experiences 0.9 percent acceleration.
In the middle of soaring inflation, consumer price index (CPI) surged by 1 percent from the previous quarter and was up by 2 percent from the same period a year earlier. The result beats the market expectations of a 0.8 percent on-quarter rise in CPI and a rise of 1.8 percent on year. The central bank had forecast a 0.7 percent quarterly increase and a 1.7 percent rise on year.
Domestic inflation - which excludes import prices - mounts by 1.1 percent from the previous quarter and 4.1 percent from the year earlier.
Data reveals that quarterly inflation mounted at a faster-than-expected pace pushing the currency to a 22-year high. Market reaction was swift with the New Zealand dollar rising to a record high of US$0.7894 (euro0.5728) from US$0.7861 (euro0.5705) just prior to the inflation data. It had fallen back to US $0.7863 (euro 0.5707).
Galloping inflation spark the anticipation of interest rate hike. The bank raised its key rate in March, April and June by 75 basis points, to a record high of 8.00 percent.
To curb the inflation, policymakers are eager to increase bank rates as economy is not showing any sign of cooling down.
Via: New Zealand Herald
