Petrol: up 4 percent. Power: up 2.7 percent. And tomatoes: up 63.6 percent (that'd be the work of the Queensland floods). Inflation is outpacing expectations as the consumers price index rose 1.0 percent for the June 2011 quarter —pushing the annual rate to 5.3, the highest since 1990.
The CPI outstripped the RBNZ’s June Monetary Policy Statement forecast of a 0.7 percent increase, and follows on from a 2.3 percent rise in the December quarter when GST was raised from 12.5 to 15 percent.
"The 1.0 percent increase in the CPI reflects higher prices for petrol, food, air travel, and electricity," Statistics NZ's prices manager Chris Pike says.
This was driven by transport costs, with petrol prices increasing by 4 percent in the last quarter (20.1 percent over the past year). International air fares gained 6.8 per cent and domestic fares were up 8 per cent.
"Petrol prices reached a new peak in early May 2011 —slightly above their peak in July 2008—before decreasing later in May and June," says Pike.
The Statistics New Zealand figures come after last week's GDP figures showed growth of 0.8 per cent in the first quarter, double the forecast. And they reinforce growing sentiment that the Reserve Bank will raise interest rates later this year.
ASB economist Christina Leung says there is a strong case for an OCR increase in December and inflation is likely to build further in the coming year.
"It looks like the underlying momentum in the economy is looking up."
ASB had predicted an 0.8 percent increase; Leung says the key surprise in today's numbers came in the tradeables sector. She says demand for items such as clothing (up 0.9 percent) and household contents (up 1.4 percent) has been weak for months, and increased demand is now allowing retailers to recoup some of their losses.
While the most significant gains in the year to date have come from transport, up 11 percent, food prices were a major contributor (7 percent), and housing and household utilities rose 4.4 percent.
In the June quarter, utilities rose 0.9 percent, as electricity costs increased by 2.7 percent. New housing purchases gained 0.9 percent, influenced by rises in Canterbury and the rest of the South Island.
Higher grocery prices were also noted (1.1 percent) with vegetables up 6.7 percent. Bought tomatoes lately? They cost 63.6 percent more last quarter, due to shortages caused by the Queensland floods earlier this year.
The CPI measures the weighted average price change of a fixed basket of goods and services, which represents the average expenditure of households. Statistics NZ visits 3,000 shops around New Zealand to collect prices for the CPI and check product sizes and features.