KEY POINTS:
Inflation accelerated in the March quarter, with nearly half the damage done by higher food prices.
The consumers price index rose 0.7 per cent in the quarter, of which higher food prices contributed 0.34 percentage points and petrol 0.2 percentage points, Statistics New Zealand reported.
It pushed the
annual inflation rate to 3.4 per cent, up from 3.2 per cent in December and further outside the Reserve Bank's target band of 1 to 3 per cent.
For the year ended March the 20.5 per cent rise in petrol prices was a key contributor. Had petrol prices remained unchanged inflation would have been 2.5 per cent.
The quarterly and annual increases were bang on Reserve Bank forecasts, but slightly lower than the median forecasts in a Reuters poll of economists which were for rises of 0.8 per cent for the quarter and 3.5 per cent for the year.
Households are being hit hardest by rises in basic items, while price reductions are coming in more discretionary items such as computers and holidays.
During the March quarter food prices overall rose 1.8 per cent, with grocery food prices up 3.6 per cent.
Within that subgroup the most significant increases were from cheese (up 18.9 per cent), bread (up 7.3 per cent) and butter (up 33.9 per cent), SNZ said.
Prices for the housing and household utilities group were up 1 per cent in the March quarter, mainly due to a 1.2 per cent rise in actual rentals for housing, a 0.9 per cent rise in the purchase of new housing and a 0.8 per cent rise in electricity prices.
A 0.8 per cent rise in the transport group for the quarter included a 4 per cent rise in petrol prices, mostly offset by an 8.6 per cent fall in the cost of international air transport. Audio visual and computing equipment was down 3.6 per cent for the quarter, while overseas package holidays fell 5.7 per cent.
For the year, along with the 20.5 per cent rise in petrol prices, purchase price of new housing rose 5.7 per cent, actual rentals for housing were up 3 per cent, and electricity was up 6 per cent.
From the March 2007 quarter to the March 2008 quarter the food group increased 5.1 per cent, with grocery food up 8.7 per cent.
Audio visual equipment was down 21.2 per cent for the year, early childhood education down 34.7 per cent and pharmaceutical products down 15.8 per cent.
The non-tradable component - goods and services facing no foreign competition - rose 1.1 per cent in the March quarter and 3.5 per cent for the year.
Tradables - goods and services that are imported or in competition with foreign goods - were up 0.2 per cent in the quarter and 3.4 per cent for the year.
- additional reporting NZPA