New Zealand inflation rose to a 32-year high in the first quarter of 2022, proving the central bank’s recent decision to raise interest rates by 50 basis points was right.
However, the figures were slightly off market expectations, prompting a decline in kiwi dollar trading in the Asian session.
The consumer price index (CPI), a measure of inflation, rose 1.8% in the quarter ended March from 1.4% recorded in the last quarter of 2021. The increase, however, fell short of expectations of a 2.0% increase.
Meanwhile, the annual inflation rate rose to 6.9% in the first quarter, following an increase of 5.9 per cent in the previous period but below the forecast of 7.1%.
The increase was the highest since the second quarter of 1990, with the main contributors driven by rising food, construction and housing prices.
Prices for new residential construction rose by 18% in the first quarter from a year ago, the biggest increase recorded since the series began in 1985.
The Central Bank of New Zealand (RBNZ) raised interest rates at a policy meeting last week, expressing concern over higher inflation expectations by the end of the year and citing the need to address them.
