New Zealand’s CPI misses expectations in second quarter of 2016

[Correction: The lead and the title have been edited to make necessary changes]

New Zealand’s inflation came in below consensus forecast and central bank’s projection in the second quarter of 2016. According to Statistics New Zealand, the country’s consumer price index rose 0.4 percent in the June 2016 quarter, after rising 0.2 percent in the first quarter of this year. Consensus projection was for a rise of 0.5 percent, whereas the RBNZ expected inflation to accelerate 0.6 percent. Tradable prices in New Zealand accelerated 0.6 percent quarter-on-quarter, whereas non-tradable inflation accelerated 0.3 percent.

“Higher petrol and housing-related prices were countered by lower prices for meat and domestic air fares,” said Statistics New Zealand consumer prices manager Matt Haigh.
 
The largest contributing factor to the headline print was petrol prices, which rose 5.3 percent in the second quarter, following a drop of 7.7 percent in the first quarter of 2016 and 7 percent in the fourth quarter of 2015. It contributed 0.2 percentage points to the headline inflation. However, petrol prices are likely to detract 0.1 percentage point in the third quarter, noted ANZ in a research report.
 
The CPI, stripping petrol, rose 0.2 percent in the second quarter, stated Statistics New Zealand. Prices of housing and household utilities were up 1 percent. The gain was mainly due to increased prices of newly constructed houses, excluding electricity, land and rentals for housing.
 
Meanwhile, meat prices were a major drag on the headline print. It dropped 2.7 percent in the second quarter. Moreover, domestic air fares also dropped significantly during the quarter, falling 9.9 percent, negatively contributing to the headline print. Domestic air costs have declined 14 percent since the fourth quarter of 2015.