The gain matched the median forecast of 10 economists.
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Auckland rents rose 0.7% in the March quarter from the December quarter and were up 3.2% from the same quarter a year ago, which was nearly twice as fast as the rental inflation of 1.7% of New Zealand excluding Auckland.
This is well below the government’s inflation target range of between 1% and 3% although with oil prices now recovering CPI’s from this month will likely start rising, after falling for the past five consecutive months.
In a recent speech, Deputy Governor Geoff Bascand said much of the weakness in inflation could be attributed to falling commodity prices and a high New Zealand dollar. The New Zealand dollar gained to US69.08 cents, from US68.90c immediately before the data was released.
There’s speculation the Reserve Bank will again cut the official cash rate after a report released today showed inflation rose just 0.2 percent in the first quarter of this year.
Transport prices made the largest downward contribution for the year, influenced by lower petrol prices (down 5.1 per cent). There’s a 64 percent likelihood of a cut by June. “The details of the data will constitute a small upside surprise from the RBNZ’s perspective”.
ASB Chief Economist Nick Tuffley said the Reserve Bank’s decision next Thursday remained a close call.
Most think the Reserve Bank will cut the OCR by another 50 basis points to 1.75% this year.
The CPI measures the rate of price change of goods and services purchased by New Zealand households. Food and cigarettes led the increase.
YEAR-on-year inflation for the first quarter of 2016 continued in the negative territory, exerting pressure on manufacturers to reduce consumer prices to stimulate demand.
This means that prices – as measured by the all-items CPI – decreased by an average of -2,31 percentage points between March 2015 and March 2016. That is negligible compared to January-February 2015, when prices were up 7.2 percent over the closing prices of 2014.
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In the year, the tradables component fell 1.2 percent and non-tradables rose 1.6 percent.
