Annual inflation has fallen to 3.3% in the June quarter with vehicle spending down but increases in dwelling and vehicle insurance premiums largely driving higher insurance prices.
The 3.3% inflation rate was down from 4% in the 12 months to the March 2024 quarter and takes the country’s inflation rate back to June 2021 levels, according to Stats NZ.
The Reserve Bank of New Zealand’s target range for consumer inflation is between 1-3%.
The consumers price index rose 0.4% in the June 2024 quarter, due to rising prices for housing and household utilities, partly offset by lower recreation and culture prices.
In the transport group, vehicle spending was down 2.3% in the June quarter, private transport supplies and services were up 1.8% and passenger transport services were down 3.3%.
Housing and household utilities was the largest contributor to the annual inflation rate. This was due to rising prices for rent, construction of new houses, and rates.
The next largest contributor to the annual increase was miscellaneous goods and services, due to rising prices for insurance.
Prices for insurance increased 14% in the 12 months to the June 2024 quarter, following a 14% increase in the 12 months to the March 2024 quarter.
Consumers prices senior manager Nicola Growden says this is nearly double from 15 years ago in June 2009 which was the previous highest peak in the series.
Increases in dwelling and vehicle insurance premiums largely drove the higher insurance prices.
Following the CPI data, ANZ was among banks revising its Official Cash Rate (OCR) cut predictions.
The bank brought forward its forecast timing of the first 25bp cut in the OCR to November, rather than in February.
“We see the balance of risks around that as tilted towards earlier (October) rather than later. Beyond that, we are forecasting a steady run of 25bp cuts at each meeting to a terminal rate of 3.5% as before,” the bank says.
At its recent meeting, the Reserve Bank kept the OCR at 5.5% and says it expects headline inflation to return to within the 1% to 3% target range in the second half of this year.
