New Zealand: Inflation drops in third quarter
October 25, 2011
In the third quarter, consumer prices added 0.4% over the previous quarter, which was below the 1.0% increase observed in the second quarter and fell short of market expectations that consumer prices would rise 0.7%. The main driver behind the third quarter outturn was higher food prices, which was offset by lower prices for transport. As a result of the decrease, annual headline inflation dropped from 5.3% in the second quarter, its highest level in two decades, to 4.6% in the third quarter. Despite the fall, inflation remains above the Central Bank's inflation target of 2.0% 1.0%. The Central Bank expects inflation to overshoot its target and average 4.5% in the fiscal year 2011 (ending in March 2012) but fall back to 2.0% in fiscal 2012.
Author: Ricardo Aceves, Senior Economist