Higher prices for fuel and a range of other goods and services in September suggest inflation pressures have strengthened.
Stats NZ figures showed petrol prices rose 6.4 percent on August and diesel prices were up nearly 8 percent, as global energy prices remained elevated amid renewed US-Iran tensions and pressure on fuel supplies.
Prices spokesperson Nicola Growden said fuel prices had been gyrating since the Middle East war broke out sending prices surging at the start in March and april, then easing back in the middle of the year, before resuming the climb in August.
“Although prices in September were above March levels, they were still below the peak recorded in April.”
Petrol was more than 24 percent higher than a year ago and diesel was close to 56 percent more expensive over 12 months.
Fuel prices make up about 4 percent of the broad inflation measure, the consumer price index (CPI).
Food prices flat – mostly
Food prices were flat for the month, but the annual rate edged up to 2.4 percent higher from August’s 20 month low of 1.9 percent.
Fruit and vegetables were down 2.7 percent for the month, 1.8 percent cheaper than a year ago.
An 86 percent rise in onion prices over the past year, the highest on record, might bring tears to many a household, as would more expensive chocolate, restaurant meals, and food kits.
However meat and dairy product prices eased, which offset grocery price rises.
Food prices make up about 19 percent of the broad inflation measure, the CPI.
Electricity and gas, airfares, commercial accommodation, and rents all rose in price.
Inflation impulse stronger
ASB senior economist Mark Smith said the numbers, which make up about half the consumer price index, were considerably stronger than expected.
He calculated that prices of the measured goods and services rose 1.4 percent for the month, and even stripping out fuel and energy prices showed underlying inflation of 1.1 percent for the three months ended September.
“There remains a tug-of-war between cost pressures and economic spare capacity in influencing the core inflation trajectory, but at present higher costs appear to be winning.”
Headline inflation hit a two and a half year high of 4.1 percent in the year ended June, and new numbers for the September quarter are due on October 22.
Preliminary picks are that the annual rate will edge lower, but Smith said that was likely to be only a temporary dip with resurgent fuel prices, higher building costs and airfares sending the annual rate back above 4 percent.
“The uplift in NZ fuel prices is looking increasing persistent with much greater risk that this follows through into wider wage and price setting.”
He said higher inflation for longer would be a major headache for the Reserve Bank.