New Zealand’s annual inflation, as measured by the consumers price index (CPI), increased to 3.3 percent in June. This was the biggest increase in nearly a decade and was driven by higher prices for new housing and petrol.
Stats NZ said previous annual inflation had peaked at 5.3 percent in June 2011, impacted by a GST increase of 2.5 percentage points that came into effect in October 2010.
Before this, annual inflation reached 5.1 percent in the September 2008 quarter, during the time of the global financial crisis.
Increases noted in 10 of 11 categories
Latest figures released by Stats NZ show that price increases have been widespread, with 10 of the 11 main groups in the CPI basket having higher prices, on average, than a year ago.
Part of the annual increase was attributable to the fact it is measured against the June 2020 quarter – a period impacted by the Covid-19 lockdown, during which some prices fell.
“A year ago, in the June 2020 quarter, we saw lower petrol prices and measures put in place during the lockdown, such as cheaper public transport, which resulted in lower consumer prices that quarter,” Aaron Beck, the Prices Senior Manager at Stats NZ, explained. “This magnified the overall increase somewhat.”
Stats NZ noted that quarterly inflation was 1.3 percent, also the highest in over a decade.
Construction costs in NZ on the increase
The cost of building a new house was the biggest contributor to both annual and quarterly inflation this quarter, up 7.4 percent for the year and 4.6 percent for the quarter.
“Higher prices for building houses reflect both supply-chain problems and high demand,” Beck said.
“Several construction firms have told us that it is hard to get many of the materials they need to build a house, and that there are higher labour and administration costs.
In addition, in the year to May 2021, $18.3-billion of residential building work was consented, up 18 percent on a year earlier.”
Rent and transport costs also contribute
Rent prices increased 2.9 percent for the year, and 0.9 percent for the quarter. In the June 2021 quarter, rent prices went up 0.5 percent in Auckland, 1.3 percent in Wellington, and 0.6 percent in Canterbury.
Petrol prices increased 16 percent between the June 2020 quarter and June 2021 quarter. The weighted average price of a litre of 91 octane was NZ$2.13 in the June 2021 quarter, up from NZ$2.00 in the March 2021 quarter. By the end of the quarter, prices were about 2.6 percent higher than the average over the quarter.
Overall, annual transport prices increased 9.4 percent, due to higher prices for used cars and international airfares, as well as petrol.