WELLINGTON (BLOOMBERG, REUTERS) – New Zealand inflation accelerated more than economists expected in the second quarter to a fresh 32-year high.
Annual inflation quickened to 7.3 per cent from 6.9 per cent in the first quarter, government data showed on Monday (July 18). Economists had forecast 7.1 per cent. Consumer prices advanced 1.7 per cent from three months earlier, exceeding the 1.5 per cent median estimate.
Central banks around the world are rapidly raising interest rates to regain control of inflation, which is spiralling as demand outstrips supply amid pandemic bottlenecks and the war in Ukraine.
The Reserve Bank of New Zealand (RBNZ) last week delivered its third straight half percentage point increase, taking the official cash rate to 2.5 per cent, and said it will keep tightening policy “at pace”.
The New Zealand dollar rose after the release of the data. It bought 61.78 United States cents at 11.30am in Wellington (7.30am Singapore time), up from 61.53 cents beforehand.
Annual inflation is running at the fastest since the second quarter of 1990, when it reached 7.6 per cent. The RBNZ targets the midpoint of a 1 per cent to 3 per cent range over the medium term.
In May, the central bank forecast that inflation would peak at 7 per cent this year then ease back to the top of its band by late 2023. However, it said last week there was “a near-term upside risk” to inflation.
The main drivers of the 7.3 per cent annual inflation were rising prices for construction and rentals for housing, Statistics New Zealand said in a statement. The New Zealand government on Sunday moved to offset some of the inflationary pressures by extending the duration of cuts to the fuel excise tax, road user charges and public transport fares.