The sharp rise in consumer price inflation was hurting
lower-income families and people in Canterbury, Council of
Trade Unions economist Bill Rosenberg said yesterday.
Statistics New Zealand figures showed the consumer price
index, the official measure of inflation, rose 0.9% in the
three months ended September, taking annual inflation to
1.4%, the highest reading since early 2012.
However, it was the eighth successive result below the
Reserve Bank's midpoint in its 1% to 3% target range.
Mr Rosenberg said among the price increases for the year
housing costs stood out.
''This is further confirmation of the need to treat
affordable housing as an increasingly urgent need.''
Rapidly rising housing costs were hard for all households to
adjust to but were a particularly large part of the
expenditure of low-income households, he said.
Higher-income households tended to get more relief from low
interest costs because they had higher mortgages. Petrol and,
in the last quarter, vegetables were difficult costs for
anyone to avoid, but low-income families were particularly
Much of the inflation was occurring in Canterbury, which had
a 2.3% increase in the CPI for the year, compared with 1.1%
to 1.3% in the rest of the country, Mr Rosenberg said.
ANZ chief economist Cameron Bagrie confirmed sharp rises in
food and fuel prices underpinned the lift in tradeable
prices. Outside those areas, the competitive retail
environment and the higher level of the New Zealand dollar
continued to restrain overall price increases in the
Price falls were evident for new and used cars, international
airfares, apparel and communications.
In a survey of prices collected from retail outlets,
Statistics NZ noted 15% of all quarterly items were
discounted or ''on special'' in September. That was slightly
above the 14% seen in both the June 2013 and September 2012
''Viewing the distribution of price movements shows prices
for 48% of items rose, 16% were unchanged and 37% fell - not
substantively different from the last quarters, suggesting no
immediate warning signs on the inflation front.''
The Reserve Bank would be wary of signs of firming in core
inflation, Mr Bagrie said.
ANZ economists expected annual inflation to approach 2% by
late next year.
A combination of demand and supply-side factors were
responsible. With the economy strengthening, pockets of
pricing pressure were likely to broaden, which would be the
catalyst for official cash rate hikes.
Mr Bagrie expected the Reserve Bank to lift the OCR, from the
current 2.5%, in March next year.