New Zealand’s consumer prices rose at their fastest pace in three decades; beating forecasts and raising the prospect of an unprecedented 75 basis point interest rate hike; at the central bank’s policy meeting next month.
The consumer price index (CPI) increased 7.3% in the second quarter; speeding up from a 6.9% gain in the first quarter and the fastest since the June quarter of 1990 when prices rose 7.6%; Statistics New Zealand.
The index rose 1.7% quarter-on-quarter, slightly slower than the 1.8% rise in the first quarter. The inflation readings were above economists’ expectations; for a 1.5% rise for the quarter and a 7.1% annual gain.
New Zealand is among a host of central banks racing to get ahead of surging global inflation; which is driven by supply constraints caused by the Ukraine war and the pandemic. Last week, Singapore and the Philippines surprised markets with out-of-cycle monetary policy tightenings; while Canada delivered a much larger than expected 100 basis point rate hike.
Inflation and the impact it has had on a households in New Zealand have become a political issue. The government; moved to offset some of the inflationary pressures by extending the various breaks on fuel excise taxes, road user charges and public transport fares.