Prices rebound as New Zealand unlocks from COVID-19
Higher prices for vegetables and rates, and a rebound in the cost of public transport, led to a 0.7 percent rise in the consumers price index (CPI) in the September 2020 quarter, taking annual inflation to 1.4 percent, Stats NZ said today.
The rise this quarter more than reversed a 0.5 percent drop in inflation during the June 2020 quarter, when petrol prices fell sharply as the COVID-19 pandemic hit. By early June, New Zealand was back to COVID alert level 1, but in mid-August the Auckland region moved back to alert level 3. The rest of New Zealand moved to COVID alert level 2 at this time.
COVID-19 uncertainty was a factor in the 18 percent rise in vegetable prices over the September quarter.
“Because restaurants and cafes were shut during COVID alert levels 3 and 4 in April, many tomato growers delayed or reduced planting their crops during this time because they were not sure if demand would recover,” prices senior manager Aaron Beck said.
“This led to a supply shortage in the September quarter.”
See Food price index: August 2020 for more information.
Council rate rises were more muted than usual this year, in the wake of COVID-19. The 3.1 percent annual increase in local authority rates and payments is the smallest in 20 years.
“Councils have faced unprecedented financial strain due to the COVID-19 pandemic and have reassessed their budgets,” Mr Beck said.
“This has led to many rate increases lower than those signalled in councils' long-term plans.”
Prices for passenger transport services rose 0.4 percent in the September quarter, following a fall in the June quarter.
“Some goods and services like public transport were free in the June quarter during COVID-19 restrictions,” Mr. Beck said.
“Many of these prices have since returned to around pre-COVID levels.”
Overall passenger rail prices roughly halved in the June quarter, influenced by free rides for some urban passengers, then bounced back in the September quarter.
Petrol prices tick up on excise tax
Petrol prices rose 1.7 percent in the September quarter, following a 12 percent fall in the June quarter. The weighted average price of a litre of 91-Octane was $1.86 over the quarter, up from a weighted average price of $1.83 in the June quarter.
Global fuel prices rose over the quarter after falling strongly in the first four months of 2020. In addition, a 3.5 cents per litre increase in petrol excise duty was added at the beginning of the quarter on 1 July.
Regionally, petrol prices rose 1.8 percent in Auckland, rose 1.2 percent in Wellington, were flat in the Rest of North Island, and rose 6.6 percent in Canterbury.
Rents partly in check during freeze
Rent prices rose 0.5 percent in the September quarter, the smallest quarterly rise in two years. The COVID-19 rent freeze ended in late September. A new law limiting rent increases to once a year also came into effect this quarter.
The rent freeze only affected existing tenancies. However, landlords could raise the rent on their property if a new tenancy was started.
Domestic airfares up slightly over the year
Domestic airfare prices were 5.7 percent higher in September 2020 than they were in September 2019 and 4.3 percent lower than they were in March 2020.
Cellphone prices fall after two big rises
Cellphone prices fell in the September quarter, driving down prices for telecommunications equipment by 15 percent in the three months, reversing rises in the first half of the year.
Over the last three years, prices for telecommunications equipment decreased 34 percent.
“Cellphones, like many other consumer electronics items, are rapidly changing, and new more powerful and better-quality models are introduced regularly,” Mr Beck said.
“It is important that we adjust for the change in quality, and new products are introduced to the index in a way that measures the price relative to their features.”
“If a new model has better features than the old model, but costs the same, that counts as a price drop. You wouldn’t pay the same for an inferior model, whether it is a cellphone or a car.”
See Measuring price change for consumer electronics using scanner data for more information.
Annual inflation almost steady at 1.4 percent
Annual inflation for the year to September 2020 was 1.4 percent, after increasing 1.5 percent in the year to June 2020.
Domestic or non-tradable inflation increased 2.6 percent in the year to September 2020. This is the first time it has fallen below 3 percent annually since June 2019 quarter.
The latest annual increase in domestic inflation was influenced by higher prices for cigarettes and tobacco, rentals for housing, and purchase of new housing, offset by lower prices for telecommunication services.
The 2020 CPI review has updated the basket of goods and services in the CPI and the relative weight of each item. E-cigarettes and exercise equipment are now measured in the CPI, while some older technology such as cordless phones are no longer measured. See Consumers price index review: 2020 for more information.