Food and alcoholic beverages and tobacco are two of the 11 CPI groups which are monitored. Photo: 123RF
- Consumer price index rises 0.5% in December quarter
- Annual inflation steady at 2.2% - lowest since March 2021
- Higher airfares, used cars, rents drive quarterly rise offset cheaper food, petrol
- Domestic inflation easing but still strong
- Steady and low inflation backs further RBNZ rate cuts
Inflation has held steady at a near four-year low, backing the prospect of a further hefty interest rate cut next month.
Stats NZ said the consumer price index rose 0.5 percent in the three months ended December, leaving the annual rate steady at 2.2 percent, the lowest since March 2021.
The biggest contributors to the quarterly result were higher rents, second hand cars, airfares, and accommodation, which offset cheaper fuel and food.
"Prices are still rising, but not as much as previously recorded," senior manager of prices Nicola Growden said.
For the final three months of the year international airfares rose 6.6 percent, and domestic fares rose 9.3 percent, to be the biggest single contributors to the overall CPI increase.
However, there were also significant rises in second hand car prices (4.7 percent), games and toys (8.7 percent), and rents (0.8 percent).
The main offsets were an 11.5 percent fall in vegetables, smaller falls for nuts and confectionary, petrol and diesel.
Stubborn domestic inflation
Domestic prices - non-tradables - remained the backbone of inflation, rising 0.7 percent for the quarter, and 4.5 percent for the year, on the back of rising rates and rents.
Local authority rates rose 12.2 percent on a year ago, rents were up 4.2 percent, and tobacco taxes up 7.6 percent.
"Annual rent inflation continues to rise at a consistent rate," Growden said.
By comparison, the price of imported goods and services - tradables - rose 0.3 percent for the quarter but were down 1.1 percent for the year.
Falling petrol prices - down 9.2 percent for the year - and a near 15 percent drop in imported vegetable prices were the key influences.
Growden said cheaper petrol had been keeping a lid on inflation over the past year.
"If petrol was excluded, the CPI would have increased 2.7 percent in the 12 months to December."
The inflation numbers were in line with economists' expectations and the Reserve Bank's (RBNZ) November forecasts, and support the prospect of a 50 basis point cut in the official cash rate cut next month, as signalled by the central bank.
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