WELLINGTON, Oct. 18 (Reuters) – New Zealand’s Consumer Price Index (CPI) rose 2.2% in the third quarter, beating expectations and increasing at the fastest pace in more than a decade due to housing costs and other supply constraints, according to data released on Monday showed.
The CPI rose 2.2% in the quarter ending September from a 1.3% increase in the second quarter, the largest quarterly move since a 2.3% increase in the December 2010 quarter, a Statistics New Zealand said in a statement.
Annual inflation jumped 4.9% from a 3.3% increase in the previous quarter, also the biggest annual move in more than a decade.
The data exceeded analysts’ expectations in a Reuters poll and the Reserve Bank of New Zealand (RBNZ) forecast, both of which put the quarterly rise in inflation at 1.4%, pushing annual inflation at 4.1%.
The main drivers were housing costs, such as building new homes and the local authority rate, Statistics New Zealand said in its statement.
Vegetable prices were the second major factor along with transportation costs and fuel prices. New Zealand’s largest city, Auckland, has been closed since mid-August to eradicate an outbreak of the Delta variant of the coronavirus.
The New Zealand dollar surged, reaching $ 0.7103, as traders anticipated a tightening of central bank monetary policy in response to higher than expected inflation.
The RBNZ hiked rates earlier this month and announced further tightening ahead as it seeks to keep inflation near its target range of 1-3% and cool a boiling real estate market. Read more
âWe already expected the RBNZ to continue raising rates despite the Auckland foreclosure,â said Ben Udy, economist at Capital Economics.
âBut the strength of consumer prices in the third quarter will surely push the bank into an even more aggressive upward cycle,â he said.
Reporting by Praveen Menon; Editing by Diane Craft and Daniel Wallis
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