Inflation hits highest annual rate since mid-1990
Inflation hit its highest level in 30 years, with consumer prices rising 1.4% in the three months to December, bringing the annual rate to 5.9%.
The surge in housing, transport, construction and leisure goods was just above forecasts.
Inflationary pressures were widespread, with eight of the 11 price groups used by Stats NZ rising in the quarter, with the biggest increase in housing-related costs, such as new home construction, rents, rates and prices utilities, partially offset by cheaper food.
“Construction companies have experienced supply chain issues, higher labor costs, as well as higher demand, which have driven up the cost of building new homes,” said Aaron Beck, head of consumer prices at Stats NZ.
Homeownership prices rose 4.6% for the quarter and 15.7% for the year.
But prices in other sectors were also rising; transport increased by 5.4% due to higher fuel prices, used car prices and public transport, and there was an increase in computers and mobile phones as well as clothing and shoes.
The annual rate was the highest since mid-1990.
The data showed strong domestic inflation, known as non-tradable goods, which rose 1.5% for the quarter, up 5.3% from a year ago, while the Imported inflation, known as tradable goods, like fuel, rose 1.3% for the quarter and 6.9%. annually.
An economist said the data showed there was a solid core of national inflation and it was not just a temporary issue.
“A widening rising inflation front is emerging that will be difficult to slow down, and we expect annual CPI inflation to remain above 3% through 2023,” he said. said SBA chief economist Mark Smith.
The strength of the numbers should lead to a series of hikes in the official exchange rate (OCR) throughout the year from the Reserve Bank.
“Consistently high inflation and an extraordinarily tight labor market backdrop and outlook warrant a faster pace of OCR increases and a higher OCR endpoint,” Smith said.
He said he expected the cash rate, currently at 0.75%, to hit 2% by the end of the year.
Prime Minister Jacinda Ardern said that the inflation rate was completely based on the global situation and that in the United States, for example, the rate was even higher than in New Zealand.
Oil prices and international tensions that affect those oil prices have been a contributing factor, she said.
“We are not the only ones experiencing high inflation rates.”