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New Zealand's annual inflation rate slipped to 3 percent in the March quarter, but food prices still packed a nasty punch.
The annual rate has fallen from an 18-year high of 5.1 percent as recently as the September quarter, and from a 3.4 percent annual rate in December.
For just the three months to March, the Consumers Price Index rose 0.3 percent, following a decrease of 0.5 percent in the December quarter, Statistics New Zealand (SNZ) said today.
The data was in line with economists' expectations.
A food price rise of 1.2 percent was a key factor in the increase for the March quarter, as was a 1.8 percent rise in the alcoholic beverages and tobacco group.
The main downward pressure for the quarter came from a 1.5 percent fall in transport prices.
Used cars were up 3.5 percent in the quarter, cigarettes up 4.2 percent, and new cars up 3.7 percent. International air transport dropped 16.5 percent and diesel fell 19.2 percent.
For the year to March, food rose 8.8 percent and housing and household utilities were up 3.6 percent, while transport costs were down 2.6 percent.
Electricity rose 7.5 percent during the year, housing rentals gained 2.1 percent and ready-to-eat food lifted 6.2 percent, while petrol fell 9.3 percent, audio-equipment was down 20.8 percent, and used cars lost 4.5 percent.
In the March quarter the tradable component of inflation -- those goods and services imported or in competition with foreign goods -- fell 0.4 percent. The most significant downward contribution came from international air transport.
The non-tradable component -- where there is no foreign competition -- rose 0.7 percent, with the key increases coming from cigarettes and tobacco, and education.
SNZ also published latest Food Price Index data today showing food prices gaining 0.5 percent in the month of March.
Meat, poultry and fish prices were up 1.4 percent, and fruit and vegetables up 1.6 percent, while grocery food prices fell 0.2 percent.
Lettuce lifted 55.5 percent, strawberries were up 61.5 percent, plain biscuits up 14.2 percent and fresh chicken up 3.2 percent, while apples were down 16.9 percent, potatoes down 9.4 percent, and cheddar cheese down 6.9 percent.
The Reserve Bank, which is required to keep inflation within a 1-3 percent target range in the medium term, said last month it expected annual CPI inflation to temporarily drop below 1 percent in the September quarter, before returning to around 2 percent.
With New Zealand in recession throughout 2008, the longest contraction in more than 30 years, the Reserve Bank lowered the official cash rate since last July from 8.25 percent to 3 percent now.
It is widely expected to lop off another 0.5 percentage points at its next review on April 30.