StatsNZ announced yesterday that the annual inflation rate was 4.9 per cent, compared to the September 2020 quarter.
The construction of new houses and local council rates were major contributors to the increase.
Further increases included 10 of the 11 main groups in the CPI list, food and transport were highlighted.
The second largest contributor was vegetables, which rose 19 per cent and due to higher fuel prices 6.5 per cent increase, transport cost rose by 4.2 per cent.
“At 4.9 per cent, the inflation beast has arrived,” said KiwiBank chief economist Jarrod Kerr. “Global supply-chain disruption should be addressed as the world gets back to a new normal – taking the pressure off shipping costs.”
“Labour shortages will hopefully abate next year as our, by then, vaccinated country starts the process of opening back up to the world.”
The Reserve Bank has a target range of 1 -3 per cent for inflation.
“The RBNZ had already fired a 25 basis point hike and a further 100 basis points or so have been loaded. With full employment achieved and mounting inflationary pressures, the RBNZ has good reason to continue firing,” Kerr said.
The New Zealand dollar rose sharply after the StatsNZ release yesterday (briefly above US71c) as markets weighed the prospect of interest rates moving up faster.
Head of research at Bank of NZ, Stephen Toplis said,”The RBNZ will need to be less cautious.”
A combination of CPI inflation and the labour market meant the RBNZ may need to increase the OCR by 50 basis points in November said Toplis.
New Zealand is not the only country dealing with this issue.
Globally, other countries are dealing with similar problems.
