New Zealand: Inflation rises from decade low
October 16, 2013
Consumer prices rose 0.9% over the previous quarter in Q3, which was above the 0.2% increase observed in Q2. The reading overshot market expectations of a 0.8% rise. According to the statistical institute, higher prices for petrol and fresh food, particularly for vegetables, were the main drivers behind the quarterly increase.
After falling to its lowest level in a decade in the second quarter (Q2: 0.7% year-on-year), annual headline inflation climbed to 1.4% in the third quarter. The reading marks the highest level of inflation since Q1 2012. As a result, inflation now sits within the Reserve Bank of New Zealand's 1.0-3.0% target range.
The Bank expects inflation to average 1.4% in the fiscal year 2013/2014 (ending March 2014). For fiscal year 2014/2015, the Bank expects inflation to average 1.9%. FocusEconomics Consensus Forecast panelists expect inflation to average 1.3% in 2013, which is unchanged from last month's forecast. For 2014, the panel anticipates that inflation will rise to 2.2%, which is also unchanged from last month's estimate.
Author: Ricardo Aceves, Senior Economist