Annual Inflation At 4.0 Percent

New Zealand’s consumers price index increased 4.0 percent in the 12 months to the March 2024 quarter, according to figures released by Stats NZ today.

The 4.0 percent increase follows a 4.7 percent increase in the 12 months to the December 2023 quarter.

“Price increases this quarter are the smallest since June 2021. However, they remain above the Reserve Bank of New Zealand’s target range of 1 to 3 percent,” consumers prices senior manager Nicola Growden said.

Housing and household utilities was the largest contributor to the annual inflation rate. This was due to rising prices for rent, construction of new houses, and rates.

Rent prices increased 4.7 percent in the 12 months to the March 2024 quarter, while construction of new houses and rates increased 3.3 percent and 9.8 percent, respectively.

“Rent prices are increasing at the highest rate since the series was introduced in September 1999,” Growden said.

The next largest contributor to the annual increase was recreation and culture, due to rising prices for international accommodation, and cultural services (which includes items like subscription TV, cinema tickets, and zoo admission).

Prices for international accommodation increased 20.8 percent in the 12 months to the March 2024 quarter, following a 6.0 percent increase in the 12 months to the December 2023 quarter.

Cultural services increased 9.7 percent in the 12 months to the March 2024 quarter, following a 6.6 percent increase in the 12 months to the December 2023 quarter.

Alcoholic beverages and tobacco was the next largest contributor, driven by rising prices for cigarettes and tobacco, and beer.

Quarterly inflation at 0.6 percent

The consumers price index rose 0.6 percent in the March 2024 quarter, due to rising prices for alcoholic beverages and tobacco, and recreation and culture, partly offset by lower transport prices.

Cigarette and tobacco prices rose 6.5 percent in the March 2024 quarter. The annual tobacco excise tax increase occurred on 1 January 2024.

“The average price of a pack of 25 cigarettes was $54.27 in March 2024,” Growden said.

“One cigarette now costs about $2.17, while 10 years ago they cost 93 cents each.”

New excise duty rates: New Zealand Customs has more information on the increased excise tax.

The fall in transport prices was driven by a 10.3 percent decrease for international air transport (airfares) and a 2.3 percent decrease in petrol prices.

“Just over half a million New Zealand residents returned from their short-term travel in January and February. Some of them may have accessed the cheaper international airfares seen this quarter,” Growden said.

Chinese New Year lifts visitor arrivals has more information about the number of visitor arrivals in February 2024.

Tradeable and non-tradeable inflation

Non-tradeable inflation was 5.8 percent in the 12 months to the March 2024 quarter (compared with 5.9 percent in the 12 months to the December 2023 quarter), driven by rent, construction of new houses, and cigarettes and tobacco.

Non-tradeable inflation measures final goods and services that do not face foreign competition and is an indicator of domestic demand and supply conditions. However, the inputs of these goods and services can be influenced by foreign competition.

Tradeable inflation was 1.6 percent in the 12 months to the March 2024 quarter (compared with 3.0 percent in the 12 months to the December 2023 quarter), driven by higher petrol and international accommodation prices. This was partly offset by lower prices for international air transport and vegetables.

Tradeable inflation measures final goods and services that are influenced by foreign markets.