Annual inflation rises to 18 month high of 2.5%

Sunday 17 October 2004

Inflation, as measured by the Consumer Price Index, rose to an 18 month high of 2.5% in the September year.

By The Landlord

Releasing the data today, Statistics New Zealand said the CPI rose 0.6% in the September quarter - bang on economists' forecast.

The data may give the Reserve Bank further cause to hike interest rates twice more this year.

Private sector economists believe the bank will hike rates for sixth time this year on October 28. Whether the central bank goes again at its next review on December 9 may depend on whether oil prices ease and on the strength of the New Zealand dollar.

The RB, which forecast a 0.5% CPI rise for the quarter, expects inflation to jump above its 1-3% target inflation band in the first half of next year. But economists expect the economy to be already turning down by December.

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