New Zealand consumer prices were higher than expected in the third quarter as housing-related costs continued to increase.
The kiwi dollar rose above 72 US cents for the first time since October 4 and recently traded at 71.93 cents from 71.75 cents immediately before the release.
The consumers price index rose 0.5 in the three months ended September 30 while annual inflation was 1.9 per cent, Statistics New Zealand said.
Economists had expected inflation to be 0.4 per cent in the three months ended September 30, for an annual rate of 1.8 per cent, according to the median in a poll of 13 economists surveyed by Bloomberg. That compares to the central bank's projection of inflation of 0.2 per cent in the third quarter for an annual rise of 1.6 per cent.
The Reserve Bank is mandated with keeping annual inflation between 1-and-3 per cent, with a focus on the mid-point. Acting Reserve Bank governor Grant Spencer kept the official cash rate at 1.75 per cent as widely expected at the September review and signalled no change on the immediate horizon. Rates have been on hold since November last year and the central bank's forecasts show it does not expect to lift rates until September 2019 at the earliest.
The September quarter inflation was higher than the June period when it was unchanged in the quarter and rising at an annual pace of 1.7 per cent.
Housing-related prices continued to increase, up 1 per cent in the quarter and 3 per cent annually.
"Collectively, housing-related costs had the largest upward contribution in the September quarter, slightly offset by falls in transport prices," Stats NZ said.
Prices for new housing rose 1.1 per cent in the June quarter for an annual increase of 5.4 per cent. Actual rentals for housing rose 0.6 per cent in the quarter and were up 2.2 per cent on the year. Rentals increased 1 per cent in Wellington and 0.5 per cent in Auckland and fell 0.2 per cent in Canterbury, Stats NZ said. It was the largest increase in Wellington rents since December 2008.
Local body rates rose a quarterly 3.5 per cent and were up 3.7 per cent on the year. Local authorities set their rates annually and these mainly show in the September quarter's data, Stats NZ said.
Refuse disposal and recycling rose 1.7 per cent in the quarter and climbed 5.1 per cent for the year. Household energy, which includes electricity, gas and solid fuels rose a quarterly 0.3 per cent and an annual 1.7 per cent.
Dwelling insurance rose 6.1 per cent in the quarter and was up 12 per cent on the year.
Stats NZ said the rise in housing-related costs was slightly offset by decreases in petrol prices and other transport costs.
Petrol prices fell 1.7 per cent in the quarter and were up 4.5 per cent on the year. The average price of a litre of 91 octane petrol was $1.83 in the September quarter, down from $1.86 in the prior quarter. Overall the transport sector - which includes fuel and other services such as airfares - fell 1.1 per cent on quarter and showed an annual rise of 2 per cent. Domestic airfares rose a quarterly 4 per cent while international air transport fell 5.5 per cent.
Food prices, meanwhile, rose 1.1 per cent in the quarter, with vegetable prices rising 6.2 per cent. Food prices were up 2.8 per cent on the year.
The tradables CPI, which includes goods and services that compete with international rivals, rose 0.2 per cent in the quarter and was up 1 per cent for the year. Non-tradables inflation, which focuses on domestic inflation, rose a quarterly 0.7 per cent for a 2.6 per cent annual increase.
The release of the December quarter CPI data will be a week later than usual as Stats NZ is implementing a review of the index, something that happens every three years. The data will now be released on January 25.