Fuel and rent drive inflation

16 July 2019

The consumers price index (CPI) rose 0.6 percent in the June 2019 quarter, due to higher prices for petrol and rent, Stats NZ said today.

In the year to June 2019, the inflation rate was 1.7 percent, up from 1.5 percent in the March 2019 year.

Petrol prices rose 5.8 percent in the June 2019 quarter after a 7.0 percent fall in the March 2019 quarter.

The average price of 91 octane petrol was $2.13 a litre this quarter, up from $2.01 last quarter, but still under its peak of $2.18 in the September 2018 quarter.

“Petrol prices rose slowly over the first part of the quarter, reaching a peak in late May and then falling,” prices senior manager Paul Pascoe said.

“By the last week of June, the petrol pump price was 2.0 percent lower than the June quarter average.”

 

While the petrol price rise was the largest contributor to quarterly inflation, many other transport items fell. Price falls for second-hand cars, along with seasonal falls for domestic air fares and rental cars, offset the petrol price rise.

Used car prices fell 3.9 percent in the June 2019 quarter, compared with a 3.3 percent fall in the same quarter last year. This quarter’s prices are the lowest since the December 2015 quarter.

Domestic air fares are usually cheaper in June quarters. This quarter they fell 13 percent compared with 12 percent in June last year. Domestic air fares have also been falling steadily since 2015, with this quarter’s air fares the cheapest since the December 2010 quarter.

Housing costs continue to rise

Rent prices rose 1.0 percent in the June 2019 quarter, and increased 2.5 percent over the year. The latest quarterly rise is the largest since the March 2008 quarter when rent prices rose 1.2 percent.

By region, the largest increases in rental prices were for:

  • Wellington – up 1.4 percent quarterly and 3.8 percent annually
  • Auckland – up 0.6 percent quarterly and 2.0 percent annually
  • Canterbury – up 0.5 percent quarterly and 0.9 percent annually
  • Rest of the North Island – up 1.4 percent quarterly and 3.6 percent annually
  • Rest of the South Island – up 1.2 percent quarterly and 3.3 percent annually

“We’ve introduced an improved method for calculating rent prices that incorporates all tenancy bonds lodged, compared with the previous method of using a survey of landlords,” Mr Pascoe said.

“Samples tend to get less representative the longer they are used, while our new method captures all tenancies, not just a sample.”

New methodology for rental prices in the CPI explains the new method and compares this with the previous one used.

Construction prices have slowed down, rising 0.7 percent for the second quarter in a row. This has reduced the annual increase to just 3.5 percent, the lowest it has been since the March 2013 quarter.

“The fall in construction price inflation is consistent with construction activity having slowed down since its peak in 2016,” Mr Pascoe said.

Video

View a video summary of the Consumers price index: June 2019 quarter on the Stats NZ YouTube channel after 11am today.