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New Zealand’s annual inflation lower at 6%

New Zealand’s consumers price index increased 6 per cent in the 12 months to June this year, which is now at its lowest level since late 2021, although domestic pressures remain high, the country’s statistics department said on Wednesday.

The 6 per cent increase follows a 6.7 per cent increase in the 12 months to March 2023, Xinhua news agency quoted Stats NZ as saying.

“Prices are still increasing at rates not seen since the 1990s but are rising at a lower rate than the last few quarters,” the department’s consumers prices senior manager Nicola Growden said.

Food was the largest contributor to the June 2023 annual inflation rate.

This was due to rising prices for vegetables, ready-to-eat food, and milk, cheese, and eggs, Growden said.

Vegetable prices increased 23.3 per cent in the 12 months to June 2023, while ready-to-eat food and milk, cheese, and eggs increased 9.8 per cent and 13.8 per cent, respectively, he said.

“With food prices up 12.3 per cent annually, consumers may be buying cheaper alternatives to keep their food bill lower,” Growden said.

The next largest contributor to the annual increase was housing and household utilities.

The increase was due to rising prices for both construction and rents, he said.

“The price of building a new home has increased by more than a third in the three years from the June 2020 quarter,” Growden said, adding rents increased 4.2 per cent in the 12 months to June 2023, following an increase of 4.3 per cent in the 12 months to March 2023.

The lower inflation came as government actions to help rein in cost-of-living pressures and support New Zealanders are starting to work, said Finance Minister Grant Robertson.

“But inflation is still too high, and we are committed to helping bring down the cost of living and supporting those doing it tough,” Robertson said, adding New Zealand’s annual rate of 6 per cent is below the Organization for Economic Cooperation and Development (OECD) average of 6.5 per cent.

New Zealand’s Reserve Bank announced last week to leave the official cash rate (OCR) unchanged at 5.5 per cent, saying the level of interest rates is constraining spending and inflation pressure as anticipated and required.

The Reserve Bank said the OCR will need to remain at a restrictive level for the foreseeable future, to ensure that consumer price inflation returns to the 1 per cent to 3 per cent annual target range, while supporting maximum sustainable employment.

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