The Consumers Price Index rose 0.8% in the March quarter, giving annual inflation of 1.5%, according to Statistics New Zealand.
The result is dead in line with market forecasts, though lower than the Reserve Bank expected, with its forecast of a 1% rise in the March quarter and 1.7% annual inflation. Remember, the RBNZ aims for annual inflation within 1% to 3%, with an explicit target of 2%.
In the December 2020 quarter, the CPI rose 0.5%, giving an annual inflation rate of 1.4%.
As expected, higher fuel and transport costs led the increases in the March quarter, while housing related costs also contributed strongly.
The impact of disruption to the supply of goods due to the global pandemic was also apparent, although perhaps not to the extent that might have been expected.
Kiwibank chief economist Jarrod Kerr said there was nothing in the inflation report that the RBNZ would be surprised by, or even react to.
"They need to see how inflation is tracking this time next year, after the supply disruptions have washed through. Bottlenecks at our ports will eventually be addressed," Kerr said.
"Strip away the volatility and core inflation remains subdued, easing from 2.1% to 2.0%. The economy is not yet strong enough to generate a sustained lift in prices. When setting monetary policy, central banks look to the medium term, and try to look through temporary shocks and disruption."
Market reaction to the figures was muted.
Stats NZ said "prices for getting around" rose, with transport prices rising 3.9% in the quarter, the biggest quarterly rise in over a decade.
Petrol prices rose 7.2%, the biggest quarterly rise since June 2015. Despite this, however, petrol prices are 3.8% lower than they were a year ago, Stats NZ's prices senior manager Aaron Beck said.
The price of buying a car also rose over the quarter. Used car prices rose 4.4%, following a similar 4.6% rise in the December 2020 quarter. Annually it is the highest annual increase in used car prices since 2012.
“There have been many delays with imports of goods into New Zealand. This may have resulted in fewer cars available for sale,” Beck said.
And housing costs rose in line with the fast rising housing market. (Remember buying and selling of existing houses is not included in the CPI.)
Rent prices rose 1.0% in the March quarter, the biggest quarterly increase in a year. Annual rent prices increased 2.7%.
The cost of building a new house also rose in the March quarter, up 1.2%.
“Reported shortages of many building products such as timber and house fittings and furnishings, as well as higher labour costs likely contributed to the movement,” Beck said.
The price of building a new home increased 3.5% in the year to March 2021, the biggest annual increase since June 2019. However, this is less than half of what it was when it peaked at almost 9% in 2004.
Tobacco prices have been one of the main drivers of non-tradable inflation over recent years. For four years, the annual tobacco excise tax increase was 10% in addition to the CPI (all groups less credit services for the year to 30 September). However, the large annual excise increases have come to an end, and so the annual increase on 1 January 2021 was only from the all groups CPI less credit services for the year to 30 September 2020.
Some highlights of the March quarter figures included:
- Transport rose 3.9%, influenced by higher prices for private transport supplies and services (up 4.9%) and purchase of vehicles (up 2.6%).
- Housing and household utilities rose 0.9%, influenced by actual rentals for housing (up 1.0%) and home ownership (1.2%).
- Alcoholic beverages and tobacco rose 1.6%, influenced by higher prices for cigarettes and tobacco (up 2.7%).
- Food rose 0.6%, influenced by grocery food (up 0.9%) and restaurant meals and ready to eat foods (up 0.9%).
Consumer prices index
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60 Comments
Nothing to see people, move along. Least regrets always, FLP to the moon!
I actually can’t believe it’s 1.5% something doesn’t add up.
My salary went up less than 2% expenses went up 6%. As long as property investors are protected, Orr will sleep well as he is one of them himself.
Cheaper snacks, clothing, phones, internet and computers 'offset' the higher costs of stocking the fridge with healthy items, driving to work, buying and maintaining your home, and education and healthcare services.
Feed chippies and Coke to your kids, layer them up with more clothes to keep them warm and educate them at home with YouTube videos. The quality of life of millions shouldn't come in the way of higher returns of a few thousand speculators.
This is actually very true, we used to visit our local markets and get locally grown produce, support the local stalls in the markets. Now I’m scanning online shops to see if cauliflower is 50c cheaper or potato is a dollar cheaper per kilo and go straight there instead. This affects everyone including your local small businesses. Mental health at the same time is deteriorating. Let everyone feel the pain while a select few line their pockets.
Go to the oligopolies of Foodstuffs and Woolies (Countdown) - my weekly groceries are substantially up on an annual basis. My guess is the CPI basket of goods is weighted towards household expenses that have decreased. Another example of cherry picking data to bolster the narrative.
I agree. As a fairly new retiree, I find myself taking note of grocery prices in the various stores - something I used to make fun of elderly people doing (before I got old myself). What I am noticing is that a number of major stores are reducing the price of chips, cokes, etc (to use as loss leaders), but the healthy items or what I would call 'stock' items, have gone up in price considerably.
Wife uses Pak N Save online ordering. Pulled up an order from 12 months ago and comparing prices for the identical items to today, each of the todays prices are "Everyday Low":
Bobby Bananas - $3.89 now $3.49
Pork Mince, Chicken, Carrots, Apples - No change
Prime Mince - $17.49 kg now $16.99
Lettuce - $1.99 now $2.99
Bread - $3.19 now $3.29
Anchor A2 2L - $6.42 now $6.47
Nappies - $16.99 now $15.99
Cat Biscuits - $7.75 now $8.49
Will need to do an average price comparison across a quarter. For instance I only buy nappies when on special. Same with pet food, get more of them when on special. So will need to see if something you bought a year ago vs the same now and what specials were happening on that week.
True. However, all the current prices are Pak N Save's "everyday low" price, not the "extra low" price which indicates a special.
I cannot tell if the prices from last year were a special. If they were on special, and today's prices aren't a special, then that could indicate grocery prices have potentially gone backwards, which I doubt is the case.
No the figure would be quadruple plus. The way the housing market has increased now for decades is the reason its not included. Currently we would have Hyperinflation if house price increases over the last 3 months were factored in. How can you possibly manage an economy if your not using the right variables in the calculation ? May as well just put your head in the sand.
MStatistics New Zealand says the Consumers Price Index rose 0.8% in the March quarter, giving annual inflation of 1.5%;
And one year bank deposit rates are?
Dec 19 annual inflation at 1.9% falls to 1.5% as of Mar 21 while RBNZ balance sheet blows up from $24.599bn to $82.972bn over the same period.
Commodity prices over last year...
Lumber: +265%
WTI Crude: +210%
Gasoline: +182%
Brent Crude +163%
Heating Oil: +107%
Corn: +84%
Copper: +83%
Soybeans: +72%
Silver: +65%
Sugar: +59%
Cotton: +54%
Platinum: +52%
Natural Gas: +43%
Palladium: +32%
Wheat: +19%
Coffee: +13%
Gold: +3%
RBNZ: InfLatION is oNE pOinT FiVE peRCeNt
Let's end the CPI eh?
Add Bitcoin as a store of value:
1 year change +676.25%
https://coin.dance/stats
Save in the money that earns you more purchasing power over time.
"Remember, the RBNZ aims for annual inflation within 1% to 3%, with an explicit target of 2%".
Why?
Every business tries to be more efficient and deliver better products at lower prices.
Yet the RBNZ has an 'aim' to make us pay more for stuff.
Time these thieves were locked away.
"And housing costs rose in line with the fast rising housing market. (Remember buying and selling of existing houses is not included in the CPI."
If they include buying and selling of the house, Mr Orr will not be able to hide behind such data and inflation in real term would be and is in double digit.
This data is to suit reserve bank narrative and manipulate with econimy.
https://www.stats.govt.nz/information-releases/consumers-price-index-ma…
Download the XML spreadsheet published and go to tab 9 for the expenditure weights by group, subgroup, or class .
Thanks - I just had a quick look through. Sheet 5 is interesting (2017 vs 2020). Interesting to see how the weighting has shifted.
There's enormous scope for massaging figures here and limited detail on how the prices are calculated. "Meat and poultry" - have we swapped steak for offal?! Perhaps I've missed that, it's a relatively complicated dataset.
Have not noticed a change in woollies or pak n slave prices even for dairy products. I pop in there nearly every day...nup, nothing. Seems like some are wishing inflation into existance. Temporary price jumps due to supply bottlenecks aside. The only 'items' that have been inflating have windows and a roof
I predict it will blow well clear of 5% over the next 12 months., even with the meaningless cpi calculation. Ill be putting up all my prices 5 - 15% over the next 3 months, most importers I know are doing the same or higher. Freight and raw material costs are out of the park. The only thing that will save them is a lack of supply of consumer goods.
A 52inch sony TV swapped for a Veon with the same features a few years later. Steak swapped for some weak substitute due to "changing habits" (code for people are skint). 2016 iPhone can be replaced with some $99 device from the warehouse on specs alone.
These CPI figures are garbage.
"Food rose 0.6%, influenced by grocery food (up 0.9%) and restaurant meals and ready to eat foods (up 0.9%)."
Love to know how the make-up of this is worked out. Food at the supermarket going up 0.9% of a massive weekly shopping bill is more of a hit than a restaurant meal going up by 0.9%, which I might get once a month if that.
Data, does it have any meaning to average person where it says that inflation is just 1.5% but reality is......... As it is, be it reserve bank, polticians or bureaucrats, they all do what they want to do based on the script decided much before any data is released ( not to forget that data paramers are also set by them - including what make them comfortable and can be manipulated and rxclude that....)
Once the data is released, they spin and manipulate to suit their premeditated agenda for vested and biased interest.
By error, Mr Orr spelt out their mindset as to when they follow 'least regret' policy and when to delay or avoid to follow 'wait and watch' policy as is correctly been highlighted by many in media and social network.
Double standard stand exposed. When had fear that house price may fall or growth may slow (was not happening but just a thought/fear that house price may fall) acted overnight to promote and threw everything to not only support but promote housing ponzi by folowing least regret concept AND now when it is not just a thought but is actually happening that house prices are touching new height on a weekly basis and as they do not want to act (as in favour and happy with the ponzi) are following wait and watch concept.
If your savings and investments are not outpacing the rate of monetary expansion (25% for the USA) then you are loosing purchasing power.
When a currency is losing value, the price of hard assets such as the stock market, real-estate, fine art etc appear to go up significantly when denominated in that currency.
Everyone knows the base rate has been 7-10% in real living costs increases rather than 2% as we are told.
And the CPI is just day to day living costs. The goods and services that we are striving for are going up at 15-20% a year, but of course they are not included in the CPI..........
Your not always loosing purchasing power, it depends on what it is your purchasing. Technology items have only got cheaper and so have cars if you consider what your now getting for your money. I bought a new motorbike a couple of years ago, its twice the bike it was in 1987 and 25% cheaper now. Of course if your saving for a house your money is turning into toilet paper. It all depends on what stage of life your in.
Oh sure....inflation is reported by a government agency as 1.5%.
Meanwhile the average house price is reported to have increased by more than $40,000 in just one month and banks are predicting 23% gains in 2021.
When will we demand that our government stops pulling the wool over our eyes?
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