By Lucy Craymer
WELLINGTON (Reuters) -New Zealand’s consumer inflation was in line with expectations in the fourth quarter and continues to track towards the central bank’s target range of 1% to 3%.
Annual inflation was 4.7% in the fourth quarter, slower than the 5.6% in the third quarter, Statistics New Zealand said in a statement on Wednesday. It is now at its lowest level since the middle of 2021.
The consumer price index (CPI) rose 0.5% quarter-on-quarter, slower than the 1.8% rise in the third quarter. The data was in line with economists’ expectations in a Reuters poll.
The Reserve Bank of New Zealand (RBNZ) raised its policy interest rate to 5.5% in the middle of 2023 from a record low of 0.25% in October 2021 to try to dampen inflationary pressures.
Rates have been on hold as the central bank waits for higher rates to work through the economy and pull inflation down. The central bank had forecast in November that fourth-quarter inflation would be 5.0% and that the inflation rate would return to the target band by the second half of 2024.
The main drivers of the annual inflation were food, alcohol and tobacco and housing and household utilities, Statistics New Zealand said in a statement.
“Rent is 4.5% more expensive than at the end of 2022. While the price increase in building a new house has fallen to 3.6%, it is 41% more expensive that pre-pandemic,” said consumers prices senior manager Nicola Growden.
Statistics New Zealand added that annual non-tradeable inflation was now at 5.9%, down from 6.3%.
(Reporting by Lucy Craymer; Editing by Chris Reese and Daniel Wallis)
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