The Consumers Price Index rose by 0.5 per cent in the March quarter, putting the annual rate at 1.6 per cent, Statistics New Zealand said.

The outcome compares with a Reserve Bank forecast, contained in its March monetary policy statement, of a 0.7 per cent quarterly gain.

It also compares with a 0.3 per cent contraction in CPI in the December quarter, and an annual inflation rate of 1.8 per cent for calendar 2011.

Today's release is unlikely to worry the Reserve Bank, whose mandate is to contain annual inflation within a 1 to 3 per cent range.


The Reserve Bank said in March that inflation had settled near the middle of the bank's target range, and that inflation expectations have fallen.

At the time, the bank said strength in the New Zealand dollar would reduce the need for future increases in the official cash rate, which it has maintained at 2.50 per cent since March, 2011.