New Zealand’s third-quarter inflation exceeded expectations

Annual inflation rose to 7.2% in the third quarter, slowing from the 7.3% rise in the second quarter and just below three-decade highs, Statistics New Zealand said in a press release on Tuesday.

The CPI rose 2.2% qoq after rising 1.7% in the second quarter. The data came in above expectations of economists who had expected a 1.6% rise for the quarter, and a 6.7% annual increase, according to a Reuters poll.

The Reserve Bank of New Zealand (RBNZ) raised interest rates to 3.50% from 0.25% in October last year. It has indicated that it will raise the interest rate further as part of its efforts to curb inflation.

The New Zealand dollar rose after data showed that inflation was higher than expected.

Statistics New Zealand said in a statement that the main driver of annual inflation of 7.2% is higher building prices, local government taxes and home rents.

“The cost of building a new home has continued to rise with supply chain issues, labor costs and rising demand, all of which combine to drive up prices,” said Nicola Grodin, head of pricing at Statistics New Zealand.

Statistics New Zealand added that annual inflation of non-tradable goods – goods made in New Zealand for domestic consumption – rose 6.6%, the highest rate since it began tracking this data in June 2002.