CPI Rises 1.4 Per Cent

Consumers Price Index: September 2000 quarter

The Consumers Price Index (CPI) rose by 1.4 per cent in the September 2000 quarter, latest Statistics New Zealand figures show. This rise follows increases of 0.7 per cent in both the March and June 2000 quarters. Compared with a year earlier, consumer prices in the September 2000 quarter were 3.0 per cent higher. This is the highest annual increase in the CPI since the 3.5 per cent increase shown in the September 1995 quarter; however, that movement was strongly influenced by increases in interest costs, which are now excluded from the CPI. The latest annual increase follows a rise of 2.0 per cent from the June 1999 quarter to the June 2000 quarter.

The most notable upward contributions in the September 2000 quarter came from price increases for petrol and for cigarettes and tobacco. If the prices of these items had remained unchanged, the quarterly increase would have been 0.6 percent. A significant fall in prices was recorded for international air travel, which last quarter showed a significant upward movement.

The price of petrol rose 13.1 per cent in the September 2000 quarter, providing the most significant contribution to the transportation group's increase of 3.3 per cent. This is the fifth consecutive quarterly increase in petrol prices. Annually, petrol prices increased by 31.1 per cent from the September 1999 quarter to the September 2000 quarter. This is the largest annual increase since a 35.4 per cent movement occurred in the June 1985 quarter.

Domestic air travel prices increased by 4.8 per cent this quarter. This follows a fall of 2.6 per cent in the June quarter. The price of international air travel decreased this quarter by 4.2 per cent. In the June quarter, international air travel increased by 9.7 per cent, typical for that time of year when seasonal demand for overseas travel increases.

Prices for cigarettes and tobacco rose 10.4 per cent this quarter, making the most significant item contribution to the tobacco and alcohol group in the September 2000 quarter. This increase follows a rise of 7.7 per cent last quarter. Both these increases reflected a May 2000 increase in excise duty on cigarettes and tobacco. On an annual basis, cigarettes and tobacco prices increased by 21.3 per cent from the September 1999 quarter to the September 2000 quarter. In addition to these increases, within the tobacco and alcohol group price rises were also recorded this quarter for beer and wine, which rose by 1.5 and 1.0 per cent respectively. Annually, the tobacco and alcohol group is 8.7 per cent higher than a year earlier, making this the highest annual increase since the December 1991 quarter.

Food prices over the quarter rose 1.2 per cent compared with the June quarter. The increase this quarter was mainly due to a 3.0 per cent price increase in the meat, fish and poultry subgroup. The other main contributors to the increase in the food group were the fruit and vegetables subgroup, which increased by 2.0 per cent, and the restaurant meals and ready-to-eat food subgroup, which rose by 1.2 per cent. The grocery food, soft drinks and confectionery subgroup rose by only 0.3 per cent this quarter.

The housing group rose by 0.6 per cent in the September 2000 quarter, driven mainly by an increase in home ownership costs, which rose by 0.9 per cent. Within the home ownership subgroup, a 2.7 per cent increase in local authority rates made the greatest contribution. The purchase and construction of new dwellings rose by 0.4 per cent in the September quarter.

Several announcements of price changes in recent weeks were made after prices were collected for the September quarter. These include petrol price decreases, as well as reported grocery food, whiteware and appliance price increases. These will be reflected in the December quarter CPI.

Ian Ewing DEPUTY GOVERNMENT STATISTICIAN

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