17 Oct 2017

Wet weather affects inflation

2:00 pm on 17 October 2017

Inflation pressures have picked up modestly with more expensive food and housing costs offsetting cheaper fuel and travel.

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Photo: 123rf

Official numbers show consumer prices rose 0.5 percent in the three months ended September, which compared with a flat reading in the June quarter.

The annual inflation rate perked up to 1.9 percent from 1.7 percent.

The numbers were above expectations, which had been for a rise of 0.4 percent for the quarter, and an annual rate of 1.8 percent.

The price of building, running, and renting a house was one of the main drivers of the pick up in inflation, but Auckland was no longer the hot spot.

"Rents and construction costs in Wellington are rising faster than for the rest of the country," prices senior manager Jason Attewell said.

"Annual rents rose by more in Wellington than Auckland, while Christchurch rents fell."

The wet weather increased the price of fresh vegetables.

Inflation numbers were above market expectations, and more than twice the Reserve Bank's forecast of a 0.2 percent rise.

However, much of the rise was due to volatile food and fuel prices, which the central bank tends to disregard when setting interest rates.

"We're still very much in a holding pattern for interest rates and we don't see any increases coming through until the first half of 2019," said ASB chief economist Nick Tuffley.

The Reserve Bank has previously signalled that it expects to keep its cash rate at a record-low 1.75 percent at least until late 2019.

The New Zealand dollar rose about a quarter of a cent against the US dollar on the numbers.

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