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

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
    • The Great NZ Road Trip
  • 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
  • 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
    • 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
    • Cooking the Books
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • What the Actual
  • 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.
Home / Business / Economy / Official Cash Rate

Inflation surprises with 1.3pc rise, dollar jumps

NZPA
14 Oct, 2009 11:30 PM4 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

New Zealand's inflation rate rose an unexpectedly strong 1.3 per cent in the September quarter, taking the annual rate to 1.7 per cent.

Publishing the data today, Statistics New Zealand (SNZ) said the annual rise was the lowest in 5-1/2 years.

SNZ prices manager Chris Pike said the rise in the September quarter was driven by higher food prices and international airfares, and by levy, excise and tax rises that usually happened at this time of year.

The 1.3 per cent rise in the September quarter followed rises of 0.6 per cent and 0.3 per cent in the June and March quarters, respectively, and a fall of 0.5 per cent in the December quarter.

For the year, a big contributor to the lower annual increase came from petrol prices and airfares falling , partly offsetting higher prices for food, electricity, and local authority rates, Pike said.

The New Zealand dollar jumped to 74.36 US cents from 74.02 cents immediately before the report and reached as high as 74.47 cents, challenging last week's 14-month high of 74.50. The kiwi jumped to 81.15 Australian cents from 80.83 cents. The trade-weighted index climbed to 66.62 from 66.34.

ASB Bank economist Nick Tuffley said the inflation number was "significantly stronger than anticipated - anything more than a 0.2 percentage point surprise becomes significant and 0.4 is a huge difference."

"The lift in inflation will be an unpleasant surprise for the Reserve Bank," said Tuffley. "Though the mitigating factor is housing remains subdued. "

But further 'administrated inflation' in the form of additional ACC and medical charges could not be ruled out, and a series of 'one-offs' will make the background inflation picture that much higher.

"We see the inflation outcome and recent strengthening in house price increases as making the Reserve Bank more reluctant to leave substantial stimulus in place for a prolonged period," said Tuffley.
" The risk has grown of the Reserve Bank unwinding the stimulus earlier than it implies."

ASB economists had been predicting a June rise in the OCR - or 'start to the tightening cycle' with the risk of it coming earlier in April 2010.

"We now see April as the more likely timing," said Tuffley.

Inflation was "surprisingly strong," said Khoon Goh, senior markets economist at ANZ National. "The Reserve Bank will not welcome this. There's a risk we will see an earlier tightening than what was expected."

The jump in inflation was a reflection of higher-than-expected government charges and the impact of companies raising prices to rebuild margins eroded by recession, he said.

The so-called non-tradable component rose 1 per cent in the third quarter, for an annual increase of 3 per cent - higher than the central bank and many economists had expected. The increase reflected gains in electricity prices, local authority charges and beer. Tradables inflation rose 1.6 per cent from the second quarter.

Bollard has said he will keep interest rates "at or below" current levels through until the second half of 2010 though traders have been betting he will go earlier.He will begin raising interest rates in March, based on Overnight Indexed Swaps, which show the OCR 30 basis points higher that month.

By July, the OCR jumped 125 basis points. Imre Speizer, market strategist at Westpac, said as a first step, Bollard may drop the words "or below" from his next monetary policy review on October 29, signaling an easing bias is off the table, Speizer said.

Transport prices fell 5.5 per cent during the year with petrol down 19 per cent, international air transport down 15.1 per cent, and diesel down 38.8 per cent.

Petrol and diesel prices peaked in July last year.

In the year to the September 2009 quarter, food prices increased 5.4 per cent, accounting for well over half of the CPI annual increase of 1.7 per cent. Electricity prices rose 4.5 per cent and local authority rates rose 6.6 per cent.

The annual inflation rate has fallen from an 18-year high of 5.1 per cent in the September 2008 quarter.

The increase in the CPI was bigger than expected, with the median forecasts in a Reuters poll of economists being for a third quarter rise of 0.8 per cent and annual rise of 1.2 per cent.

- NZPA / BUSINESSWIRE / NZ HERALD STAFF

Discover more

Opinion

Do you have faith in the Government's handling of the economy?

14 Oct 08:07 PM
Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.
Save

    Share this article

Latest from Official Cash Rate

Premium
Business|economy

Jobless rate better than expected, part-time worker increase credited

07 May 03:30 AM
Premium
Economy|official cash rate

Inside Economics: How much Government debt is too much?

07 May 12:30 AM
Economy|official cash rate

'Significant risk': Tariffs heighten volatility, Reserve Bank warns

06 May 10:48 PM

One tiny baby’s fight to survive

sponsored
Advertisement
Advertise with NZME.

Latest from Official Cash Rate

Premium
Jobless rate better than expected, part-time worker increase credited

Jobless rate better than expected, part-time worker increase credited

07 May 03:30 AM

The labour market remained weak and disinflationary, economists say.

Premium
Inside Economics: How much Government debt is too much?

Inside Economics: How much Government debt is too much?

07 May 12:30 AM
'Significant risk': Tariffs heighten volatility, Reserve Bank warns

'Significant risk': Tariffs heighten volatility, Reserve Bank warns

06 May 10:48 PM
Premium
Adrian Orr surfaces for farewell party with Reserve Bank staff

Adrian Orr surfaces for farewell party with Reserve Bank staff

02 May 06:04 AM
Connected workers are safer workers 
sponsored

Connected workers are safer workers 

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
  • What the Actual
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven CarGuide
  • 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