The CPI was up 0.4% from the same quarter a year ago, which extends to seven consecutive quarters the period when annual inflation has been below the 1-3% band targeted by the Reserve Bank.
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The trade-weighted index was little changed at 76.11 from 76.13.
The consumers price index (CPI) rose 0.4 percent in the June 2016 quarter, Statistics New Zealand said today.
Most economists forecast Wheeler will respond to persistent weak inflation by cutting the official cash rate to 2 percent next month, even as an overheated housing market poses a risk to financial stability.
A sharp drop in the price of domestic air fares kept inflation well below target, despite a recovery in petrol prices.
“Higher petrol and housing-related prices were countered by lower prices for meat and domestic air fairs”, consumer prices manager Matt Haigh said in a statement. The cost of renting a house in Auckland rose 1.0% for the quarter and 3.5% for the year.
Tradables inflation, which includes goods and services that compete with imported rivals, increased 0.6 percent, turning around a 1.2 percent drop in the first quarter, due to the pick-up in petrol prices.
Petrol prices rose 5.3% over the second quarter, making the largest upwards contribution to the CPI. This rise was influenced by higher prices for newly built houses, excluding land (up 2.1 percent), electricity (up 1.8 percent), and rentals for housing (up 0.6 percent). This follows falls of 7.7 percent in the March 2016 quarter and 7.0 percent in the December 2015 quarter. Housing-related prices rose, with new housing excluding land up 2.1%, the statistician said. Offsetting that, meat and poultry prices fell 2.7 percent and domestic air fares were down 9.9 percent, reflecting heightened competition on some local routes.
This meant food prices contributed just 0.06 per cent to the CPI.
On a quarterly basis, inflation was also up 0.4 percent versus expectations for 0.5 percent and up from 0.2 percent in the three months prior.
“The RBNZ acknowledges that price and wage-setting behaviour is more backward-looking than previously thought, therefore a low actual CPI outturn matters”, ANZ economists say.
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Seasonally adjusted CPI slowed to a 0.2 percent increase in the June quarter from 0.3 percent in March.
