New Zealand’s consumer price index rose by 6% in the 12 months leading up to June this year, marking its lowest level since late 2021, according to the country’s statistics department. This increase is lower than the 6.7% rise recorded in the previous 12 months, as reported by Stats NZ.
While inflation remains high, the rate of increase is slower compared to previous quarters, as noted by Nicola Growden, the senior manager of consumers prices at the department. The main contributor to the June 2023 annual inflation rate was food, driven by higher prices for vegetables, ready-to-eat food, and milk, cheese, and eggs.
Vegetable prices surged by 23.3% over the 12-month period, while ready-to-eat food and milk, cheese, and eggs saw increases of 9.8% and 13.8%, respectively. The rising cost of food, which increased by 12.3% annually, may lead consumers to seek more affordable alternatives.
Housing and household utilities were the next significant contributors to the annual increase, primarily due to higher prices for construction and rents. The price of building a new home rose by over a third since the June 2020 quarter, while rents increased by 4.2% in the 12 months leading up to June 2023, following a 4.3% increase in the previous 12 months.
Finance Minister Grant Robertson acknowledged that government actions aimed at controlling living costs and supporting citizens are starting to have an impact, leading to lower inflation. However, he emphasized the need to address the still high inflation rate, noting that New Zealand’s annual rate of 6% falls below the OECD average of 6.5%.
In response to the economic situation, the Reserve Bank of New Zealand recently announced its decision to maintain the official cash rate (OCR) at 5.5%. The bank cited the need to keep interest rates at a restrictive level to manage spending, control inflation, and achieve the target range of 1% to 3% annual consumer price inflation while supporting sustainable employment.