The NZ annual consumer prices rocketed 7.30% in the second quarter of this year, exceeding the forecasted 7.10%. In addition, it also advanced from the previous 6.90% upturn, marking the highest level since Q2 of 1990.
Accordingly, prices accelerated faster for housing & utilities, jumping 9.10% from 8.60% in Q1 2022. The main driver for the uptick is the 18.00% year-over-year increase in construction costs in the June 2022 quarter. At the same time, experts cited the impact of rent increases in New Zealand.
Then, the next largest contributor was the transport costs, climbing 14.50% from the last 14.30%. It came amid the annual hike of 32.00% in petrol and a whopping 74.00% increase in diesel.
However, the rise was partly offset by falling prices for road passenger transport, international airfares, and rail passenger transport. Experts cited that half-price bus and train fares came into effect from April 01. Likewise, the reduced prices for road user charges became effective on April 21.
These measures could continue to ease some transport costs. On Sunday, New Zealand announced that it would extend half-price fares. The government will also expand fuel excise duties, and road user charges until 2023.
Reserve Bank of New Zealand to publish 75bp hike
The hotter-than-expected inflation pressured the Reserve Bank of New Zealand to cool the economy. Analysts expected the central bank to publish a 75 basis point rate hike at its upcoming August meeting. This move will follow its peers in delivering a supersized increase.
Last week, the RBNZ raised its official cash rate to 2.50%, the latest lift in a series of hikes. The accumulative upturn has taken the benchmark from a record low of 0.25% in October last year. Furthermore, it has also signaled plans to increase the rate to 4.00% by 2023.
Accordingly, New Zealand is among a slew of central banks racing to get ahead of surging global inflation. The mounting prices reflected the impact of supply constraints caused by the Ukraine war and the pandemic.