Archive | Inflation

Housing components rise, but inflation rate still low

Statistics NZ has attributed a rise in inflation in the June quarter to house prices & utilities.

In its quarterly consumers price index (CPI) release yesterday, Statistics NZ said the housing components rose 0.9% in the June quarter and 3.1% in the year to June.

The overall inflation rate rose from 1.1% in the year to March, to 1.5% in the year to June.

But overall, these shifts are small and the latest rises still leave inflation below the annual levels (measured quarterly) throughout 2017. Last year began with a 2.2% annual inflation rate in the March quarter, falling to 1.7% in June, rising to 1.9% in September and falling again to 1.6% in December.

The statisticians’ measure of overall inflation has been negligible in quarterly terms since a 2.3% rise in December 2010. In annual terms, the one time inflation has topped 2% since September 2011 was that March 2017 rise to 2.2%. As the global financial crisis that began in late 2007 bottomed out in 2010-11, the official inflation measures were 4% in the year to December 2010, followed by 3 quarters at 4.5%, 5.3% & 4.6%.

Comparing quarters with the previous quarter, the inflation rate for the latest quarter was 0.4%, down from 0.5% in March

Regions catching up in construction costs

Statistics NZ said construction prices in Auckland rose 0.6% in the June quarter, and 0.7% in Wellington. For the rest of the North Island, prices were up 1.2% – twice as much as the major centres.

Housing-related costs:

  • Rents rose 0.8% in the June quarter, 2.5% in the year
  • Construction of new dwellings (excluding land) rose 1.1% this quarter, 3.9% in the year, and
  • Electricity prices rose 1.7% this quarter, 2.9% in the year.

Statistics NZ prices senior manager Paul Pascoe said yesterday: “New Zealanders are paying more to keep their homes running, Rates, property maintenance services & home insurance are all higher than they were this time last year.”

Higher premiums, fire service & earthquake levies all contributed to an 18% increase in dwelling insurance in the June 2018 year.

Attribution: Statistics NZ tables & release.

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Research indicates construction cost inflation near peak

The NZ Institute of Economic Research’s forecasts for cost management & quantity surveying firm Rider Levett Bucknall indicate construction cost inflation peaking at just below 5% in the next year before moderating to 4% by late 2019.

Rider Levett Bucknall Wellington director Grant Watkins said on Wednesday: “Beyond that, we expect annual construction cost inflation to ease to around 3.5% in late 2020, as capacity pressures in the construction sector ease.”

The research showed construction sector firms continuing to report acute labour shortages, especially in skilled labour. Mr Watkins said: “Migrants have helped to alleviate this, with an increase in technicians & trades’ workers moving to New Zealand on a work visa. Rider Levett Bucknall expects this to continue, given the amount of construction activity required over the coming years.”

According to the Rider Levett Bucknall Forecast 87 report – NZ Trends in Property & Construction, the construction pipeline should be solid for the next few years as house-building activity lifts to meet increased demand from the surge in population in recent years.

Other points it noted:

  • Demand for social buildings has now overtaken hotel developments as the top driver of growth in non-residential construction demand over the last year
    Despite net migration continuing to slow, population growth (while moderating) & tourism are expected to underpin many longer-term trends. These include office growth for the higher number of white collar workers, new accommodation buildings for the high number of international visitors, and strong domestic tourism & earthquake strengthening activity will also contribute to non-residential construction demand
  • Auckland continued to lead growth in non-residential construction demand over the last year. Demand strengthened across a broad range of sectors, with particularly large increases in demand for hotels & social buildings
  • Business confidence has been particularly soft in Wellington in the wake of the new government taking office, and Mr Watkins said this might further dampen demand for investment in new buildings over the coming year. The recent announcement by Fletcher Building Ltd that it will stop bidding for ‘vertical construction’ work also added uncertainty.

RLB NZ Trends in Property &Construction Q2 2018

Attribution: Company release.

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Housing-related costs upward but overall inflation down

The annual inflation figure fell from 1.6% in the December quarter to 1.1% in the latest quarter, Statistics NZ said yesterday.

In the March quarter compared to a year ago, tradeables (imported or in competition with foreign goods & services) were down 0.4%, non-tradeables (which don’t face foreign competition) were up 0.5% for the combined 1.1% rise.

Looking only at the quarterly move from December, the index rose 0.5%.

The last time New Zealand inflation hit what the world’s economists seem to think is “good” inflation – 2%/year – was in the September 2011 quarter, when it was at 4.6%, falling from 5.3% the previous quarter.

Housing-related costs lead annual inflation

Construction & rents led a 3.1% rise in housing & household utility prices in the March 2018 year, up from 3% rise in each of the previous 2 quarters, which followed rises of 3.1% in the June 2017 quarter & 3.3% in the March 2017 quarter.

Construction prices increased 4.7% in the year, 0.4% in the quarter. Statistics NZ said this was the smallest quarterly rise since the March 2011 quarter.
Prices senior manager Paul Pascoe said: “Rising building prices in Auckland & Wellington have begun to slow. Both were up 0.3% in the latest quarter. For Auckland, this is the smallest rise since December 2012.”

Construction in Canterbury fell 1.1% in the March quarter as the market continued to cool.

Housing rentals increased 2.1% in the March 2018 year. Regionally, Wellington rents increased 4.2%, while Auckland increased 2.5% and Canterbury rents decreased 1.5%.

“Wellington rents were up 1.8% in the March quarter, while nationally they rose just 0.6%,” Mr Pascoe said. “The average quarterly rent rise reflects many tenants not having an increase, as well as those facing higher costs. Nationally, about 80% of properties surveyed had no price change in the March quarter.

Attribution: Statistics NZ.

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Housing rises & transport falls maintain modest inflation increase

CPI – the consumers price index – rose 0.5% from the June quarter to September, and rose 1.9% for the year, pushed up by housing-related rises and held down by transport-related falls.

There was nothing unusual about the rise from one quarter to the next. Statistics NZ’s graph shows only one quarterly rise reaching 1% since June 2011, and 5 quarterly falls along the way. The March 2017 quarter was notable for a rise from the same quarter a year earlier exceeding 2% (it was 2.2%), falling back to 1.7% and then 1.9% in the 2 most recent quarters.

The index was last in bigger-than-2% territory in September 2011, with a 4.6% annual rise as New Zealand began to emerge from the depth of the global financial crisis. Since then, housing prices have skyrocketed, without great effect on the CPI.

In the latest quarter, however, Statistics NZ said:

  • Rents rose 0.6% from June & 2.2% over a year
  • The cost of construction of new homes, excluding land, rose 1.1% from June, 5.4% for the year
  • Council rates rose 3.5% from June, 3.7% for the year, and
  • Home insurance rose 6.1% from June, 12% for the year.

Regional shifts in rent & construction

Auckland had the lowest annual increases in rent & construction costs since March 2015.

In Canterbury, rents fell 1.9% for the year, the fifth consecutive annual decrease in rents for the region. The 2.6% increase for the year for construction of new homes (excluding land) was the lowest annual increase since September 2010, before the Canterbury earthquakes.

In Wellington, construction costs rose 1.4% from June, 3.2% for the year, and rents rose 1.0% from June, 3.7% for the year. That was the largest annual increase in Wellington rents since December 2008.

Among other price shifts:

  • Petrol fell 1.7% from June but rose 4.5% for the year
  • International airfares fell 5.5% for the quarter, 2.7% for the year
  • Vehicle relicensing fees fell 8% for the quarter & year
  • Prices for second-hand cars fell 0.9% from June but rose 1.8% for the year

Updated CPI for the December quarter

Statistics NZ said it would release the December quarter CPI a week later than usual because it’s implementing a review of the index. It carries out these reviews every 3 years to ensure the index remains relevant. The next quarterly index will be published on 25 January 2018, and a paper on the review will be released on 12 January.

Attribution: Statistics NZ release & tables.

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Inflation hits zero for quarter, 1.7% for year

The consumers price index (CPI), which hadn’t shifted more than half a percent in any quarter since September 2013, rose by 1% in the March quarter this year, and then stopped on zero in the latest quarter to June.

Since that 0.9% rise in September 2013, which bumped the annual movement up to 1.4%, the index has been as good as zero while property inflation has raged. But that’s eased off now as well, and the annual rate of CPI inflation has fallen back from 2.2% to March, down to 1.7% to June.

Statistics NZ the latest shift, seasonally adjusted, was a 01% decline.

Statistics NZ senior manager Jason Attewell said: “Household basics like rent, food & electricity all hit consumers’ pockets harder this quarter. Offsetting these price rises were falls in domestic airfares & petrol prices – which fell on average by 4c/litre.”

Housing-related prices continued to increase, up 0.8% from March to the June quarter, and to 3.1%/year. Prices for newly built houses excluding land rose 1.8% this quarter. Regionally, Auckland had the largest increase in the June quarter (up 3.0%), followed by Canterbury (up 0.8%) & Wellington (up 0.5%). Seasonally higher prices for electricity (up 1.5%) were the second highest contributor for the housing group. Housing rentals rose slightly (up 0.4%), held down by a 1.6% fall for Canterbury.

Attribution: Statistics NZ tables & release.

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Inflation the highest since 2011, housing index rises nationally

Statistics NZ said today the consumers price index (CPI) increased 2.2% in the year to the March quarter. That’s the biggest annual increase since the September 2011 quarter, the last quarter affected by the rise in gst from 12.5% to 15%.
Housing-related prices rose 3.3%. Prices increased for newly built houses excluding land (up 6.7%) and for rentals (up 2.3%). Newly built houses, excluding land, were up 8.0% in Auckland and 3.6% in Christchurch.
Transport prices (up 3.5%) made the second largest upward contribution. Petrol was up 12%, but partially offset by falls in other private transport services (vehicle relicensing fees).

Statistics NZ prices senior manager Jason Attewell said: “Rising petrol prices, along with the annual rise in cigarette & tobacco tax, lifted inflation. Petrol prices in New Zealand are closely linked to global oil prices, and cigarettes & tobacco taxes rise in the March quarter each year.”
For the March quarter, CPI inflation rose 1%, following a 0.4% rise in the December quarter.
Rents increased 0.8% in the quarter as 84% of the sample showed no price change. Auckland rents showed a 0.7% rise.

Auckland house price index still high, rising nationally

Statistics NZ’s index on house purchase prices in Auckland rose sharply from a 5.9% annual gain in the first quarter of 2015 to peak in the third quarter with an 8.5% rise, dropped to a 7.2% gain in the December 2015 quarter then climbed again over the next year to 8.2% in the December 2016 quarter. In the year to the March 2017 quarter, the gain was less, but still 8.0%.

Nationally, the house purchase price index has been rising – with occasionally lower gains – since the second quarter of 2014, when the gain was 4.6% over the same quarter a year earlier.

In the March 2016 quarter, the national gain was 5%/year. Since then, it’s climbed to 5.6%, 6.3%, 6.5% and, in the latest quarter, 6.7% compared to a year earlier.

Attribution: Statistics NZ tables & release.

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CPI jumps to 1.3%/year

Inflation made it to 1%/year in the December quarter, the first time the consumers price index (CPI) has made it over 0.4%/year since December 2014 and the highest inflation rate since the 1.6%/year in the June 2014 quarter.

The index rose 0.4% from the September quarter to the December quarter, and 0.7% seasonally adjusted.

The index has been marginally higher in the last year – 4 straight quarterly rises after 3 falls in the previous 5 quarters.

Statistics NZ said, for the quarter:

  • Transport prices rose 3.7%, influenced by higher petrol & air transport prices
  • Housing-related prices rose – the purchase of new housing, excluding land, was up 1.4%
  • Vegetable prices fell 15% (up 3.0% after seasonal adjustment).

And on annual change:

  • Housing & household utilities increased 3.3%
  • Transport prices decreased 1.0%
  • Tradeable prices decreased 0.1%, while prices for non-tradeables increased 2.4%.

Average prices:

  • The average price of 1 litre of 91 octane petrol was $1.82 in the December quarter, up from $1.75 in the September quarter.

The CPI measures the rate of price change of goods & services purchased by New Zealand households. Statistics NZ visits 2800 shops around New Zealand to collect prices for the CPI and check product sizes & features.

Statistics NZ prices senior manager Jason Attewell said today: “Household price inflation is up from a historical low of 0.1% for the December 2015 year. Non-tradeable goods & services showed a 2.4% increase, influenced by housing-related price increases.

“Housing-related prices continued to increase, up 3.3% in the December 2016 year. Prices increased for newly built houses excluding land (up 6.5%) and for housing rentals (up 2.0%).

“Housing-related prices in Auckland increased more than the national average, with new houses up 8.2% and rents up 3.2% from a year earlier.”

Attribution: Statistics NZ.

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CPI slips again

Statistics NZ said yesterday the consumers price index (CPI) inflation rate was 0.2% in the September quarter, down from 0.4% in the June quarter.

Consumer prices manager Matt Haigh said lower transport prices countered higher housing-related prices: “Housing & household utilities prices rose 1.1% in the September quarter. This rise was influenced by higher prices for purchase of new housing, excluding land (up 2.0%), and local authority rates (up 3.0%).

Transport prices were down 3.0%. Petrol prices fell 1.7%, with the average price of a litre of 91 octane petrol at $1.75. Prices for new & used cars also fell.

The latest quarterly figures took annual CPI inflation to 0.2%. It’s been under 1% for 2 years and under 10% for all but 5 quarters of the last 4 years.

Mr Haigh said housing-related prices continued to be the main upward contributor, up 3.2% in the year. This increase was influenced by higher prices for purchase of new housing, excluding land (up 6.3%), and rentals for housing (up 2.1%). Property maintenance prices, such as painting & plumbing, have also increased steadily throughout the year and are now 3.1% higher than a year ago.

Transport prices made the largest downward contribution for the year, down 6.7% as prices for petrol & vehicle relicensing fell.

Attribution: Statistics NZ tables & release.

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CPI down for quarter, up 0.1% over year

The consumers price index (CPI) fell 0.5% in the December quarter and increased by only 0.1% over the year.

Statistics NZ said yesterday the index often fell from the September quarter due to seasonally lower vegetable prices & seasonal discounting, but this was the largest quarterly fall since December 2008. After adjusting for seasonal effects, the CPI fell 0.2%.

The 0.1% annual shift followed 2 quarters of 0.4% annual movements and a 0.3% rise in the March quarter. Statistics NZ said the previous smallest annual movement was a 0.5% fall in the year to the September 1999 quarter.

The largest downward contribution for the year was an 8.1% fall in petrol prices. Excluding petrol, the CPI showed a 0.5% increase for the year. The small movement for the year was also influenced by both lower vehicle relicensing fees & international air fares.

Housing & household utility prices rose 2.8%, housing rentals 2.5%, newly built houses excluding land 5%, local authority rates 6.2%. In Auckland, new houses rose 7.2%, rents 3.3%.

For the December quarter compared to the September quarter, Statistics NZ consumer prices manager Matt Haigh said lower prices for petrol & vegetables were partly countered by higher prices for housing-related costs & airfares.

Attribution: Statistics NZ tables & release.

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Auckland housing costs push CPI higher

The consumers price index (CPI) rose 0.4% in the June quarter after falling 0.3% in the March quarter & 0.2% in December. Statistics NZ said yesterday the annual increase was 0.3%, up from 0.1% in March.

Rises in housing costs in Auckland were well above the national level.

Statistics NZ prices manager Chris Pike said the main impact came from higher petrol prices, which were up 8.8% in the June quarter: “Without petrol, the CPI was flat for the quarter.”

Prices for the housing & household utilities group rose 0.7% for the quarter. Prices for newly built houses excluding land were up 1.5% nationally (2.8% in Auckland, 0.7% in Canterbury). Housing rental prices rose 0.6% (Auckland up 0.8%, Canterbury 0.7%).

The prices of tradable goods & services (which face foreign competition) fell 2% over the year, and non-tradable goods & services rose 2%, the smallest annual increase since the December 2001 quarter.

Housing & household utility prices were up 2.5% in the year – newly built houses excluding land up 5.3% nationally, but up 7.6% in Auckland & 3.5% in Canterbury; housing rentals up 2.3%, but up 2.9% in Auckland & 3.5% in Canterbury; and local authority rates up 3.9% nationally.

Attribution: Statistics NZ release.

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