A rising cost in fuel and transport has contributed to the largest annual inflation rise in more than 30 years.
The consumer price index increased 6.9% year-on-year in the March 2022 quarter, according to the latest data from Stats NZ.
This is the largest movement since a 7.6% annual increase in the year to the June 1990 quarter.
The 6.9% increase follows an annual increase of 5.9% in the December 2021 quarter, the previous largest annual movement since the June 1990 quarter, which occurred shortly after the Reserve Bank of New Zealand Act 1989.
The Act came into effect in February 1990 to target the high inflation from the previous decade and maintain stability in the general level of prices over the medium term.
The main driver for the 6.9% annual inflation to the quarter was from housing and household utilities, influenced by rising prices for construction and rentals.
Prices for the construction of new dwellings increased 18% in the March 2022 quarter compared with the March 2021 quarter, the largest increase recorded since the series began in 1985.
“Construction firms have been experiencing many supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building a new house,” senior prices manager Aaron Beck says.
Transport costs
The next largest contribution to the annual inflation was from the transport group, which was up 14.3% year-on-year, influenced by higher prices for petrol and second-hand cars.
The cost of vehicle purchases was up 5.6%, transport supplies and services up 23.1% and passenger transport services up 3.9% annually to the March quarter.
Petrol prices increased 32% in the year to the March 2022 quarter, the largest annual increase since the June 1985 quarter.
The consumers price index rose 1.8% in the March 2022 quarter compared with the December 2021 quarter, mainly driven by higher petrol prices.
The price of a litre of petrol increased steadily over January and February. In the second week of March the average price of 91 petrol at the pump was $3.05. Prices then dropped following a decrease of 25 cents per litre in fuel excise duty. This is expected to remain in place for three months.
“Prices for fuel are volatile. To capture this change and accurately measure the average fuel price over the whole quarter, we sample petrol prices weekly from key sites in New Zealand,” Beck says.
“But, like any sample this may not include the highest or lowest prices paid in any period.”
The average price of one litre of 91 octane, including discounts, increased 8.7% to $2.67 in March 2022, compared with $2.45 in December 2021.
Petrol prices increased 8.3% for Auckland, 8.5% for Wellington, and 8.6% for Canterbury in the March 2022 quarter.
Tradable and non-tradable inflation record highs
Tradeable inflation was 8.5% in the year to the March 2022 quarter, the biggest annual movement since the series began in June 2000.
Tradeable inflation measures goods and services that are influenced by foreign markets, such as petrol, vegetables, and second-hand cars, which were the biggest contributors to the movement.
Domestic, or non-tradable inflation, was 6% in the year to the March 2022 quarter, also the highest since the series began in June 2000.
Higher prices for construction, rentals for housing, and local authority rates were partly offset by domestic air transport.
Non-tradable inflation measures goods and services that do not face foreign competition. It shows how domestic demand and supply conditions are affecting consumer prices.
Inflation rates around the world are currently higher than in recent years, with the OECD total at 7.7% for the year ended February 2022, United States were at 8.5%, and United Kingdom were at 7% to the year ended March 2022.
