N.Z. inflation rate jumps


Higher transport costs helped push New Zealand's annual inflation rate to 2.8%

WELLINGTON, New Zealand (CNN) -- Inflation in New Zealand hit 2.8 percent for the year to June 30 after a sharp 1 percent rise in the June quarter.

The government's data-gathering agency, Statistics New Zealand, said Monday that higher prices for petrol, international air travel, electricity, furniture and housing were behind the June quarter rise.

The increases were partly offset by a fall in food prices, especially for fresh vegetables.

The full-year figure is close to the 3.0 percent upper limit the Reserve Bank of New Zealand is allowed under its agreement with the government.

Earlier this month, the central bank lifted rates a quarter of a percentage point to 5.75 percent, noting the country's "outstanding growth" and consequent inflation risk. But it also downplayed the need for further rate rises(Full Story).

Sharp rise in transport costs

"If the exchange rate appreciation is sustained, or goes further, some heat will be taken out of future inflation pressures, reducing the extent to which interest rates may need to rise in the months ahead," the bank said when it lifted rates on July 3.

Government statistician Brian Pink said Monday the consumer price index (CPI) would have risen by only 0.5 percent in the June quarter if it had not been for the sharp gains in petrol and international air travel costs.

The transport sector rose 3.3 percent, household operations rose 1.3 percent and housing prices were up 0.7 percent, compared with prices in the March quarter.

There was a 0.5 percent fall in food prices. Fresh vegetables fell 7.4 percent, seasonally adjusted.