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Consumers Price Index: March 2017 quarter
Embargoed until 10:45am  –  20 April 2017
Commentary

Food prices feed 1.0 percent quarterly rise

The CPI rose 1.0 percent in the March 2017 quarter, following a 0.4 percent rise in the December 2016 quarter; this is the largest quarterly increase since the June 2011 quarter. Higher prices for food, alcoholic beverages and tobacco, and housing and household utilities, were partly offset by falls in recreation and culture, and communication. After adjusting for seasonal effects, prices rose 1.0 percent.

Food prices were up strongly in the March 2017 quarter.

  • Fruit prices rose 16 percent due to higher apple prices (up 29 percent). The average price for 1 kilogram of apples was $4.10 in the March 2017 quarter, compared with $3.19 in the December 2016 quarter.
  • Milk, cheese, and egg prices rose 4.7 percent, due to fresh milk (up 5.0 percent).

Alcoholic beverages and tobacco prices rose 4.0 percent in the March 2017 quarter, influenced by higher cigarette and tobacco prices (up 9.7 percent). The average price for a packet of 25 cigarettes was $31.60 in March 2017, compared with $28.82 in December 2016.

Housing and household utilities prices rose 0.6 percent in the March quarter. Prices for actual rentals for housing rose 0.8 percent nationally, with rental prices in Auckland rising 0.7 percent. Prices for newly built houses, excluding land, were up 1.0 percent nationally.

Transport prices rose 0.8 percent, influenced by higher prices for petrol (up 4.1 percent).

Recreation and culture made the largest downwards contribution (down 1.0 percent), influenced by lower prices for package holidays (down 7.5 percent).

Tradable prices continue to rise in March quarter

Tradables rose 0.8 percent in the March 2017 quarter – the first increase in tradables in the March quarter since 2011. Petrol and fruit prices rose. These rises were partly offset by lower prices for international air transport.

Non-tradables rose 1.0 percent in the March 2017 quarter, with higher prices for cigarettes and tobacco, actual rentals for housing, and newly built houses, excluding land.

The following graph shows the index points contribution to the CPI of items that rose or fell in price for each quarter (see also table 13, available from the 'Downloads' box).

Graph, CPI Percentage points contribution,March 2017

Annual inflation rate moves above 2 percent

In the year to the March 2017 quarter, the CPI increased 2.2 percent. The latest increase is the first time annual inflation has been over 2 percent since the year to the September 2011 quarter.

Housing and household utilities were the main upward contributor, up 3.3 percent, influenced by:

  • newly built houses, excluding land (up 6.7 percent)
  • actual rentals for housing (up 2.3 percent), with a 3.1 percent increase in Auckland
  • local authority rates (up 3.2 percent).

Transport prices increased 3.5 percent, influenced by:

  • petrol prices (up 12 percent)
  • domestic air transport (up 9.9 percent).

The annual increases in prices for housing and household utilities and transport were partly offset by lower prices for other private transport services (vehicle relicensing fees).

Tradables increased 1.6 percent in the year to March 2017. Higher prices for petrol, vegetables, and milk, cheese and eggs made the main upwards contributions. These were partly offset by decreases for package holidays and international air transport.

Non-tradables increased 2.5 percent in the year to March 2017. Prices for the purchase of newly built houses, excluding land, made the most significant upwards contribution, followed by cigarettes and tobacco, and actual rentals for housing. The increases were partly offset by decreases for other private transport services.

Underlying price change shows lower overall increase

The trimmed mean measures – which exclude extreme price rises and falls – showed quarterly changes below the 1.0 percent increase in the March 2017 quarter across all trims. This indicates the ‘underlying’ price change (excluding extreme price rises and falls) was lower overall for the quarter, with the cigarettes and tobacco class being the main upwards contributor. 

Underlying price change was similar on an annual basis.

Table 3.03 of the attached Excel tables shows selected groupings in the year to the March 2017 quarter.

  • CPI excluding housing and household utilities group increased 1.7 percent.
  • CPI excluding alcoholic beverages and tobacco group increased 2.0 percent.
  • CPI excluding transport group increased 2.0 percent.

The 'non-tradables less central and local government charges and cigarettes and tobacco subgroup' measure, which aims to reflect price change excluding direct government influence, rose 2.3 percent for the March 2017 year. Central and local government charges rose 1.0 percent in the year to the March 2017 quarter.

For more detailed data on the CPI see the Excel tables in the ‘Downloads’ box.

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