New Zealand's inflation rate came in just below expectations in the second quarter, as cheap imported petrol helped counter rising housing related prices, pushing the annual rate to a 14-year low.
The consumers price index rose 0.2 per cent in the three months ended June 30, just shy of the 0.3 per cent expected in a Reuters survey of economists, for an annual pace of 0.7 per cent, according to Statistics New Zealand.
That's the fourth quarter that the annual pace has been below the Reserve Bank's target 1 per cent to 3 per cent target band, and is the slowest annual pace since 1999.
Petrol prices fell 2.5 per cent in the quarter, the biggest quarterly decline since September 2011, and were down 2.8 per cent on an annual basis.
Since the end of the quarter petrol prices have increased 5 per cent.
That offset a 1.1 per cent increase in housing and household utilities prices. Housing and utilities prices rose an annual 3.1 per cent.
Newly built house prices rose 1.7 per cent in the quarter for an annual pace of 4.1 per cent, and rental prices rose a quarterly 0.4 per cent and an annual 2.1 per cent.
Electricity costs rose 2.6 per cent in the June quarter for an annual increase of 3.4 per cent.
The tepid pace of inflation has meant the Reserve Bank hasn't had to hike the official cash rate from a record-low 2.5 per cent as a bubbling property market fails to spill over into increased consumer spending.
The central bank has been reluctant to lift the key rate as it might stoke investors to buy the kiwi, further strengthening an "over-valued" currency.
The kiwi dollar averaged 76.55 in the second quarter on a trade-weighted basis, below the Reserve Bank's projected 77.50.
The TWI fell to 74.23 after the CPI report was released from 74.36 immediately before. The kiwi dipped to 77.94 US cents from 78.17 cents.
Food prices rose 0.2 per cent in the quarter, led by a 7 per cent increase in vegetable prices. On an annual basis, food prices rose 0.2 per cent. Grocery food prices shrank 0.2 per cent in the quarter and were down 1.5 per cent on an annual basis.
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