New Zealand inflation hits 18-year high

WELLINGTON: The New Zealand economy, already trapped in recession, suffered further negative news on Tuesday with the release of official figures showing annual inflation at an 18-year high of 5.1 per cent.

Statistics New Zealand said that for the September quarter the consumer price index jumped 1.5 per cent, pushed up by petrol, housing and electricity costs.

Other major contributors included food and rates. The latest figures follow a 1.6 percent increase in the second quarter, which took the annual inflation rate at that time to 4.0 per cent.

The inflation rate is well above the central bank's target of 1.0-3.0 per cent over the medium term.

Higher prices for petrol, up 29.3 per cent, accounted for just over a quarter of the 5.1 per cent increase in the annual inflation rate, Statistics New Zealand said.

The annual rate had not been higher since 1990, it said. For the year to September, food prices rose 10.8 per cent, the highest annual increase since April 1990.

However, the sharp decline in world financial markets, triggering falls in commodity and energy prices, while raising fears of global recession, are expected to help bring inflation down.

Statistics New Zealand confirmed last month that New Zealand had fallen into recession for the first time in a decade after gross domestic product shrank 0.2 per cent in the three months to June, following a 0.3 contraction in the March quarter.