NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In

Advertisement
Advertise with NZME.
Premium
Home / Business / Companies / Banking and finance

Inflation hits 6.9 per cent: 'Lower than feared' increase offers no respite from rising interest rates

Liam Dann
By Liam Dann
Business Editor at Large·NZ Herald·
21 Apr, 2022 03:00 AM5 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Rising domestic inflation, which could prove hard to beat, is worrying economists. Photo / 123RF

Rising domestic inflation, which could prove hard to beat, is worrying economists. Photo / 123RF

Inflation for the year to March landed slightly lower than many feared - but don't expect the Reserve Bank to hold back on rate hikes.

Annual consumer price inflation undershot expectations at 6.9 per cent but it still hit its highest level in more than 30 years, said ASB senior economist Mark Smith.

"Much of the downward surprise to our inflation pick looks to be due to timing and will likely reverse," he said.

"Increases in consumer prices look to be widespread, with the risk of high inflation becoming more entrenched."

Some economists had tipped the annual figure to come in as high as 7.4 per cent - the consensus of forecasts had it at 7.1 per cent.

Advertisement
Advertise with NZME.

Smith said it was uncertain whether today's figure would represent a peak for inflation.

"The bigger issue to us is not so much what the inflation peak will be, but how persistent the uptick in inflation is," he said.

"We expect annual CPI inflation to remain well above 5 per cent over all of 2022 and it may not be until 2024 that inflation falls below 3 per cent.

Advertisement
Advertise with NZME.

"We expect the RBNZ to move swiftly and deliver a 50bp hike in May."

ASB has pencilled in an OCR peak of 3.25 per cent in 2023. It is currently sitting at just 1.5 per cent.

"A significant chunk of the headline inflation figure continues to reflect the inflationary global environment, with tradables inflation reaching 8.5 per cent," said ANZ economist Finn Robinson.

"Not only has Covid continued to gum up global supply chains, but the Russian invasion of Ukraine has triggered massive commodity price volatility globally - alongside the tragic loss of life.

"As a small open economy, it's no wonder New Zealand has seen such strength in imported prices over the past year."

However, the real concern for the RBNZ was that domestic inflation pressures had continued to intensify, he said.

Non-tradables inflation lifted to 6 per cent.

Measures of core inflation calculated by Stats NZ now ranged from 3.9 per cent to 5.9 per cent - uncomfortably outside the RBNZ's 1-3 per cent target range, he said.

Advertisement
Advertise with NZME.

"And this domestic inflation is the kind that doesn't go away quickly."

The labour market was also set to tighten further this year, especially if the border opening led to a net outflow of people from New Zealand.

"That should see wage inflation take off over this year, providing even more persistence to the domestic inflation pulse, and necessitating ongoing interest rate hikes by the RBNZ."

ANZ also sees a 50-basis point hike coming next month.

The New Zealand dollar and bond yields fell in response to the data.

By midday, the kiwi was trading at US67.83c - down from US68.05c just before the release.

Two-year government bond yields dropped to 3.09 per cent from 3.14 per cent before the release, and 10-year yields eased to 3.47 per cent from 3.51.

"The market was going into this with fears of something in excess of 7 per cent, so it's natural to see some sort of mild downward spike in the kiwi," ANZ market strategist David Croy said.

"But the news is not good," Croy said.

"A 6.9 per cent reading is still not acceptable. It's just not as bad as some in the market may have feared."

Ben Udy at Sydney-based Capital Economics took a slightly more upbeat tone.

"We think inflation is now around its peak," he said.

"The Government's reduction in excise taxes has reduced petrol costs and should result in negative fuel inflation in Q2. What's more, as house prices are now falling, we think home-building inflation will ease before long."

Udy sees the OCR peaking at 3 per cent and argues the 1.8 per cent quarter on quarter rise "was broadly in line with the RBNZ's expectations, which reduces the likelihood of another 50 basis point hike in the OCR in May".

Jarden economist and investment strategist John Carran was also relatively optimistic.

"On balance we consider inflation pressures may come off more rapidly than many currently expect," he said.

"While annual inflation will remain relatively elevated for the rest of this year due to the lower level of prices last year, incremental quarterly easing of inflation combined with increasing signs of softening in the New Zealand economy could lead the RBNZ to take a more cautious approach in the second half of 2022."

Jarden sees the OCR reaching just 2.25 per cent by the end of this year, which is significantly lower than market expectations.

Food prices rose sharply in the quarter. Photo / Sylvie Whinray
Food prices rose sharply in the quarter. Photo / Sylvie Whinray

Food prices rose sharply in the quarter, up 3.1 per cent, influenced by fruit and vegetables (up 9.3 per cent) and grocery food (up 2.4 per cent).

Housing and household utilities rose 1.8 per cent, influenced by home ownership (up 3.5 per cent) and rentals (up 1.1 per cent).

Transport rose 3.3 per cent, influenced by private transport supplies and services (up 6.6 per cent) and partly offset by a fall in passenger transport services (down 9 per cent).

The 6.9 per cent annual increase follows an annual increase of 5.9 per cent in the December 2021 quarter.

Across the annual period, the most significant contributor increase in the CPI was housing and household utilities, which increased 8.6 per cent.

The area within housing and household utilities that contributed the most to this increase was the purchase of housing, up 18 per cent. Actual rentals for housing also contributed to this increase, up 4 per cent.

Transport was the second most significant contributor to annual inflation, up 14 per cent.

The largest driver of this was a 32 per cent increase in petrol price.

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Banking and finance

Premium
Banking and finance
|Updated

'Misguided stunt': ANZ declines $300m legal settlement offer

Premium
AnalysisKate MacNamara

Reserve Bank's employee benefits: Gold standard or pretty standard?

Interest rates

Lower interest rates, more money printing - RBNZ considers response to ageing population


Sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

Advertisement
Advertise with NZME.

Latest from Banking and finance

Premium
Premium
'Misguided stunt': ANZ declines $300m legal settlement offer
Banking and finance
|Updated

'Misguided stunt': ANZ declines $300m legal settlement offer

ASB yet to respond to class action settlement offer.

16 Jul 04:41 AM
Premium
Premium
Reserve Bank's employee benefits: Gold standard or pretty standard?
Kate MacNamara
AnalysisKate MacNamara

Reserve Bank's employee benefits: Gold standard or pretty standard?

16 Jul 03:00 AM
Lower interest rates, more money printing - RBNZ considers response to ageing population
Interest rates

Lower interest rates, more money printing - RBNZ considers response to ageing population

14 Jul 10:00 PM


Solar bat monitors uncover secrets of Auckland’s night sky
Sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

06 Jul 09:47 PM
NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP