"This annual increase is the lowest since 1999, and the fourth annual increase in a row below 1%,"
- Statistics New Zealand prices manager Chris Pike
Consumer price pressure in New Zealand increased less than analysts expected last quarter, due to a drop in import prices, adding to signs that a period of record-low borrowing costs will be prolonged for at least the rest of this year. Inflation rate rose 0.2% from the first quarter, when it increased 0.4%, and less than the 0.3% median estimate made by economists. At the same time, prices jumped 0.7% from a year earlier, the slowest pace since 1999 and below projections for a 0.8% increase. SNZ also said that one of the main contributor to the annual inflation rise were housing costs, which were partially offset by a drop in the prices of telecoms services and audio-visual goods. Recent strong demand for housing was largely fuelled by the expanding population in some cities, while in places like Christchurch, people are waiting for new homes, after almost 12,000 were destroyed by an earthquake, that have struck the city since 2010.
The recent figures are reducing some of the pressure on the central bank to move quickly to put up the benchmark interest rate from its current level of 2.5%, even taking into account economic recovery, housing boom and the depreciation of kiwi. The annual inflation rate remains lower than the central bank's 1%-3% target for the fourth consecutive month.
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