New Zealand is facing a fresh 32-year high inflation, reaching 7.3 per cent in the second quarter, according to official data released on Monday.
The inflation shock – the highest in three decades – has prompted the government to issue cost of living relief.
Stats NZ released its quarterly consumer price index (CPI) figures released for the year ending in June, which saw a lift from 6.9 per cent from the year ending in March.
That figure was already the highest since 1990.
The report said that housing and househol utilities were the top contributors to both the quarterly and annual inflation, with construction costs rising to 18 per cent over the last year.
“Supply-chain issues, labour costs, and higher demand have continued to push up the cost of building a new house,” said Jason Attewell, spokesman for Stats NZ.
Figures also showed rising transport and food costs as main drivers of the boom, though Westpac NZ senior economist Satish Ranchhod said “inflationary pressures are widespread and widespread and likely to persist for some time yet”.
“The high level of inflation isn’t just due to a few specific items. Price pressures have been boiling over in every corner of the economy,” Ranchhod said.
The headline 7.3 per cent rise was above forecasts from many forecasters and the Reserve Bank of New Zealand (RBNZ).
It will mean no letup in the latest round of interest rate rises.
The RBNZ lifted the official cash rate by 50 basis points last week to 2.5 per cent, its sixth consecutive hike from 0.25 per cent late last year.
New Zealand’s current inflation shock is an abrupt change to recent trends.
Prior to last year, New Zealand enjoyed a decade of inflation kept below 2.5 per cent in annual terms.
Deputy Prime Minister and Finance Minister Grant Robertson told Newstalk ZB he hoped inflation would top out this quarter.
“Forecasters are telling us they expect this is the peak and that we will start to see it slowly come down in the second half of the year,” he said.
“But it will not come down magically to those levels we’ve seen in the past.”
Pre-empting the release, Jacinda Ardern’s government announced on Sunday an extension to cost-saving measures.
Fuel excise duty, road user charges and public transport fares will remain at lower prices until January next year.
“People are seeing prices at the pump higher than they ever have,” Mr Robertson said.
“What they are looking for some certainty in what are very uncertain times.”
It is the second time the government has extended the cuts – which makes petrol 25 cents a litre cheaper and halves the cost of public transport – since they were instituted in March.
Petrol prices have surged towards $NZ3 ($2.72) a litre in New Zealand, with many places sitting well above that benchmark.
Price aggregator Gaspy has the national average for unleaded 91-octane at $NZ2.99 ($2.71) as of Monday.
That’s up from $NZ2 ($1.81) in March 2021, and $NZ2.67 ($2.42) in the March 2022 quarter.
with news from AAP