New Zealand's consumer prices regained some strength in the third quarter, driven by rising housing costs and more expensive food, but likely not by enough to budge the central bank from its current holding pattern on interest rates.
The consumer price index increased 0.5% from the previous quarter and by 1.9% from a year earlier, Statistics New Zealand said Tuesday, compared with a flat reading in the second quarter and a gain of 1.7% on year. Economists had expected inflation of 0.4% in the three months to the end of September and 1.8% compared with the previous year.
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The latest result also overshot the Reserve Bank of New Zealand's forecasts for the quarter, due largely to the costlier food, smaller-than-expected falls in gasoline prices and a recent softening of New Zealand dollar strength from highs at the end of July.
But the outcome still leaves inflation just below the midpoint of the bank's 1%-3% target range. The RBNZ said in August that it expects price growth to weaken in the fourth quarter and to fall below an annual rate of 1% in early 2018, which combined with below-forecast economic growth, suggests no change in policy for some time to come.
The data showed rising housing costs were again the biggest factor pushing up the index with a gain of 1.0% in the quarter.
"Rents and construction costs in Wellington are rising faster than for the rest of the country," said Jason Attewell, prices senior manager at Stats NZ.
Food prices also rose 1.1%, pushed up by tomatoes.
Transport prices were the biggest drag on prices, falling 1.1% on quarter.
The central bank has indicated it doesn't expect to raise interest rates until the latter half of 2019.
Write to Paul Jackson at firstname.lastname@example.org.
(END) Dow Jones Newswires
October 16, 2017 18:25 ET (22:25 GMT)