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New Zealand Economic and Financial Overview 2012

Prices and Costs

Consumer price inflation declined over the early 1990s as monetary policy directed at maintaining price stability (introduced in 1989) took effect. Since September 1991, inflation has averaged 2.3% per annum.

Inflation rose to 5.1% in the year to September 2008 as a result of high fuel and food prices, before easing back to within the Reserve Bank's 1% to 3% target band during 2009.

Annual CPI inflation remained within the target band over the six quarters prior to December 2010, with the September quarter 2010 marking the low point of the period at 1.5%. Inflation increased significantly in the December quarter 2010 as an increase in the rate of goods and services tax (GST) from 12.5% to 15% on 1 October 2010 was passed on to consumers. The CPI rose 2.3% in the quarter, taking annual inflation to 4.0%, well above the target range. Inflation increased further during 2011, rising to 4.6% on an annual basis in September before falling to 1.8% in the year to December 2011. This fall was mainly the result of the GST rate rise falling out of the calculation, but falls in food and communication prices also contributed.

Inflation is expected to increase slightly over 2012, in line with the economic recovery, as well as capacity constraints associated with the Canterbury rebuild.

Annual growth in the index of salary and ordinary-time wage rates reached a record 3.9% in the year to September 2008 before declining rapidly over the following two years to just 1.5% growth at the start of 2010. Since then it has crept up, reaching 2.0% in the year to September 2011.

Table 7 shows on a quarterly basis the Terms of Trade Index, the Producers Price Index, the Consumers Price Index, and the Labour Cost Index and, in each case, the percentage change over the same quarter of the previous year.

Table 2 - Statistical Summary Key Statistics
Year Month Terms of Trade Index[1] Annual % Change Producers Price Index[2] Annual % Change Consumers Price Index[3] Annual % Change Labour Cost Index[4] Annual % Change
2007 March 1117 4.5 859 2.5 1010 2.5 932 3.2
June 1122 2.3 870 0.8 1020 2 938 3.2
September 1163 8.4 891 1.9 1025 1.8 947 3.1
December 1197 8.8 903 4.3 1037 3.2 957 3.2
2008 March 1247 11.6 922 7.3 1044 3.4 964 3.4
June 1242 10.7 977 12.3 1061 4 972 3.6
September 1230 5.8 1013 13.6 1077 5.1 984 3.9
December 1218 1.8 990 9.7 1072 3.4 991 3.6
2009 March 1185 -5 965 4.7 1075 3 997 3.4
June 1074 -13.5 965 -1.2 1081 1.9 1000 2.9
September 1057 -14.1 954 -5.8 1095 1.7 1005 2.1
December 1118 -8.2 958 -3.2 1093 2 1009 1.8
2010 March 1186 0.1 971 0.6 1097 2 1012 1.5
June 1210 12.7 984 2 1099 1.7 1016 1.6
September 1246 17.9 991 3.8 1111 1.5 1021 1.6
December 1256 12.3 1000 4.4 1137 4 1026 1.7
2011 March 1266 6.7 1022 5.3 1146 4.5 1030 1.8
June 1296 7.1 1031 4.8 1157 5.3 1035 1.9
September 1288 3.4 1037 4.7 1162 4.6 1041 2
December 1270 1.1 642 4.2 1158 1.8 1047 2.1
  • [1] Base: June quarter 2002 = 1,000.
  • [2] All industry inputs. Base: December quarter 1997 = 1,000.
  • [3] Base: June quarter 2006 = 1,000.
  • [4] All industry ordinary time salary and wage. Base: June quarter 2001 = 1,000.

Source: Statistics New Zealand

 

 

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