Prices for transport and housing rise in March 2021 quarter

Higher prices for transport and housing led to a 0.8 percent lift in the consumers price index in the March 2021 quarter, Stats NZ said today.

Prices for getting around rose in the March quarter. Transport prices rose 3.9 percent, the biggest quarterly rise in over a decade.

Petrol prices rose 7.2 percent, the biggest quarterly rise since June 2015. Despite this, petrol prices are 3.8 percent lower than they were a year ago.

"Global oil prices plunged in early 2020 as the COVID-19 pandemic took hold. Prices have risen since then," prices senior manager Aaron Beck said.

The weighted average price of a litre of 91 octane was $2.00 in the March 2021 quarter, up from $1.87 in the December 2020 quarter and down from $2.09 in the March 2020 quarter.

By the end of the quarter, petrol prices were about 3.3 percent higher than the average over the quarter.

Regionally, petrol prices rose 6.5 percent in Auckland, 5.3 percent in Wellington, and 7.9 percent in Canterbury.

The price of buying a car also rose over the quarter. Used car prices rose 4.4 percent in the March quarter, following a similar 4.6 percent rise in the December 2020 quarter. Annually it is the highest annual increase in used car prices since 2012.

"There have been many delays with imports of goods into New Zealand. This may have resulted in fewer cars available for sale," Mr Beck said.

"Also, international travel has been restricted due to the COVID-19 pandemic, which may have boosted demand for used cars as people wanted other ways to spend their money."

Housing costs up

Rent prices rose 1.0 percent in the March quarter, the biggest quarterly increase in a year. Annual rent prices increased 2.7 percent.

Regionally, quarterly rent prices rose 1.7 percent in Wellington, 0.8 percent in Canterbury, and 0.5 percent in Auckland. Annually, Wellington rent prices increased 4.3 percent, 1.5 percent in Canterbury, and 1.1 percent in Auckland.

Not all rents go up year to year, so the actual change felt by an individual renter may differ from the average.

The cost of building a new house also rose in the March quarter, up 1.2 percent.

"Reported shortages of many building products such as timber and house fittings and furnishings, as well as higher labour costs likely contributed to the movement," Mr Beck said.

Prices for building new houses in the CPI are obtained by surveying construction companies that build standard-plan houses. The inflation of existing house prices is not included in the CPI as household-to-household transactions are out of scope. Land purchases are also excluded as they are considered to be an investment and therefore out of scope.

The price of building a new home increased 3.5 percent in the year to March 2021, the biggest annual increase since June 2019. However, this is less than half of what it was when it peaked at almost 9 percent in 2004.

Meanwhile, food prices rose 0.6 percent over the quarter. Higher prices for ready-to-eat food and milk, cheese, and eggs were partly offset by lower prices for vegetables, especially tomatoes.

Prices of consumer electronics items down

Partly offsetting prices for shelter, transport, and food were lower prices for cellphones, audio-visual equipment (such as televisions and digital cameras), and furniture and furnishings.

"The pricing of consumer electronics this quarter included many post-Christmas and back-to-school sales," Mr Beck said.

"We also adjust for the change in quality, so if a new model is released that costs the same, but has better features, we will show a price drop."

"Both these reasons may have contributed to falling prices this quarter."

Annual inflation increases 1.5 percent

Annual inflation for the year to March 2021 was 1.5 percent, slightly higher than the 1.4 percent increase in the year to December 2020.

Increasing prices for purchase of new housing and rentals for housing were partly offset by decreasing prices for petrol.

When petrol is removed, annual inflation was 1.7 percent, down from 2.1 percent in the year to December. If food, household energy, and vehicle fuels are removed, annual inflation was 2.0 percent, down slightly from 2.1 percent in the year to December.

Domestic or non-tradable inflation increased 2.1 percent in the year to March 2021, after increasing 2.8 percent in the year to December 2020.

The annual increase in domestic inflation was influenced by higher prices for purchase of housing, and rentals for housing.

Tobacco prices have been one of the main drivers of non-tradable inflation over recent years. For four years, the annual tobacco excise tax increase was 10 percent in addition to the CPI (all groups less credit services for the year to 30 September). However, the large annual excise increases have come to an end, and so the annual increase on 1 January 2021 was only from the all groups CPI less credit services for the year to 30 September 2020.

Annual tradable inflation increased 0.5 percent, with higher prices for used cars and international air transport partly offset by lower prices for petrol.