Consumer prices rose 1.7 per cent in the three months ended June - above expectations - driven by more expensive fuel, food and housing costs.
Stats NZ released its quarterly Consumer Price Index this morning. The increase is the highest since 1990 and was largely driven by rising rents and construction costs.
It follows an annual increase of 6.9 per cent in the March 2022 quarter, the previous largest annual movement since a 7.6 per cent increase in the June 1990 quarter that occurred shortly after the introduction of Reserve Bank of New Zealand Act 1989, Stats NZ said.
The Act came into effect in February 1990 to target the high inflation from the previous decade and maintain stability in the general level of prices over the medium term.
Economists were forecasting the annual rate would exceed 7 per cent.
The official numbers from Stats NZ were expected to show rising fuel prices, more expensive food, and higher building and household costs, driving the consumer price index up about 1.5 per cent for the three months ended June.
The main driver for the 7.3 per cent annual inflation to the June 2022 quarter was the housing and household utilities group. Prices for the construction of new dwellings increased 18 per cent in the June 2022 quarter compared with the June 2021 quarter.
“Supply-chain issues, labour costs, and higher demand have continued to push up the cost of building a new house,” Stats NZ general manager Jason Attewell said.
“The 18 per cent annual increase in the June quarter follows an 18 per cent increase in March and a 16 per cent increase in December 2021.”
Prices for building new houses in the CPI are obtained by surveying construction companies that build standard-plan houses. Sales of existing house prices are not included in the CPI as household-to-household transactions are out of scope. Land purchases are excluded as they are considered to be an investment, Stats NZ said.
Prices for rentals for housing increased 4.3 per cent in the June 2022 quarter compared with the June 2021 quarter.
Higher petrol and diesel
The next largest contributor to annual inflation was from the transport group, due to higher prices for petrol and diesel.
Petrol prices increased 32 per cent in the year to the June 2022 quarter - the largest annual increase since the June 1985 quarter. Diesel prices increased 74 per cent over the same period, Stats NZ said.
“The average price of 1 litre of 91 octane petrol rose 6.3 per cent to $2.84 in the June 2022 quarter, compared with $2.67 in the March 2022 quarter,” Mr Attewell said.
“The average price of 1 litre of diesel rose 30 per cent to $2.57 this quarter, compared with $1.98 in the March quarter.”
The rise in transport was partly offset by falling prices for road passenger transport, international airfares, rail passenger transport, second-hand cars, and other private transport services, which includes road user charges.
“Half-price bus and train fares came into effect from 1 April and prices for road user charges were reduced from 21 April. These price falls were reflected this quarter,” Mr Attewell said.
The Clean Car Programme had a small downward influence on prices for second-hand cars. Of the second-hand cars in our sample, more received rebates from programme than paid fees.
Warning prices may go higher
Earlier, ANZ's chief economist Sharon Zollner told RNZ this morning there was a risk prices could go even higher, after a surprise with inflation figures in the United States last week.
She said where price rises were happening was making it hard going for consumers right now - but they were continuing to spend.
Zollner said the question was how high interest rates would need to go to cool down that spending.
Transport Minister Michael Wood said the Government could take some of the pressure off prices - but not change the international factors that he said were driving inflation.
Yesterday, it extended measures on fuel tax and public transport until next January.
Wood said everyone was feeling the pressure of fuel costs and the Government was carefully monitoring to see that supplier profit margins were not widening.
National Party deputy leader Nicola Willis said allowing in more immigrants would help stem rising inflation.
She also told RNZ this morning the Government should be doing more to tackle the domestic drivers of inflation, including limiting its own spending.
- ODT Online and RNZ
