Inflation at Highest Rate in 18 Years
October 22, 2008 New Zealand Finance
According to figured released by Statistics New Zealand, the consumer price index reached a level of 1.5 percent in the September quarter.
The newest figures bring the inflation for the year to 5.1 percent, the highest it has been in the last 18 years. This comes to as no surprise to most analysts, many of whom predicted the exact figure. The rise attributed to a number of increases in the price of the measurement components of the CPI. Petrol and food price increases are attributed as being the two largest.
Food prices in the September quarter rose by 3.7 percent, with an almost 20 percent rise in vegetable prices. The newest food price figures bring the annual rate to 10.8 percent increase. There was a 4.6 percent rise in petrol prices. Vehicle relicensing fees, international flights and domestic flights rose 16.1, 3.7 and 5.4 percent respectively. These all contributed to the 5.1 percent inflation. A higher level than 5.1 percent was set in 1990, at 7.1 percent, but that did also take into account the rise of GST from 10 percent to 12.5 %.
The Reserve Bank aims to keep inflation at a mid-term level of 1-3 percent. While the current figures far exceed that, analysts predict that there will still be a drop of 100 points from the Official Cash Rate. This may seem counter-intuitive to some, but analysts predict that the Reserve Bank will place the current economic crisis higher on the scale of importance.