New Zealand: Inflation falls to lowest level in over a decade
July 16, 2013
In the second quarter, consumer prices rose 0.2% over the previous period, which was below the 0.4% increase observed in the first quarter. The reading undershot market expectations that had consumer prices rising 0.3%. According to Statistics New Zealand, the reading reflects higher prices for housing and household utilities, which were partially by offset lower prices for transport. As a result of the subdued quarterly increase, annual headline inflation fell from 0.9% in the first quarter to 0.7% in the second quarter, which marks the lowest level observed since the final quarter of 1999. Moreover, inflation remains well below the Central Bank's target of 2.0% plus/minus one percentage points. In its June inflation report, the Reserve Bank of New Zealand expects inflation to average 1.4% in the fiscal year 2013/14 (ending March 2014). For fiscal year 2014/15, the Bank anticipates inflation to average 1.9%. FocusEconomics Consensus Forecast panellists expect inflation to average 1.7% in 2013, which is down 0.1 percentage points from last month's forecast. For 2014, the panel anticipates that inflation will rise to 2.3%.
Author: Ricardo Aceves, Senior Economist