By Tony Field
This might surprise you if you are one of the many people struggling to pay your bills, but the annual inflation rate has fallen to its lowest level in 13 years.
Twelve months ago the annual inflation rate hit a record 5.3 percent but in the last three months the consumer price index rose 0.3 percent, lowering the annual rate to 1 percent.
But that doesn’t mean things are getting cheaper.
“Rent… has risen like $50 dollars in the past six months,” says mother of four Carlene Enosa.
“If you go to the supermarket you find prices have gone up all the time, so what exactly is the makeup of this inflation index?” says Ken McGunnigle, who is self-employed.
Electricity prices were up 4.5 percent in the June quarter, vegetable prices soared 11 percent thanks to seasonal increases in tomatoes and lettuce, and petrol was up almost half a percent.
But, offsetting that, fresh milk fell 4.6 percent, fruit was down by 3.2 percent and telecommunication services by 2.5 percent
That all means the annual inflation rate is the lowest it has been since December 1999.
“I think the things people notice, things like rents, like buying a new house, like electricity prices, like local authority rates, they have all increased over the year,” says Chris Pike of Statistics New Zealand.
“What's gone down are slightly more subtle, or perhaps less frequently purchased, items such as clothing, shoes, electronics and cars,” says Dominic Stephens of Westpac.
Mortgage payments are not included in the figures, but they will be affected.
Economists say the low inflation rate means the Reserve Bank won't be in any hurry to lift interest rates and it is likely to keep the Official Cash Rate on hold until early next year.
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