Government excise tax increase mostly responsible for CPI rise

The government, in ratcheting up tobacco taxes has caused the CPI to increase…albeit buy a tiny amount.

Inflation has edged up as higher cigarette prices offset cheaper fuel.

The Consumers Price Index (CPI) rose 0.2 percent in the three months ending March, reversing the previous quarter’s 0.5 percent decline. That pushed up the annual rate to 0.4 percent.

Statistics New Zealand consumer price manager Matt Haigh said prices for cigarettes, food, rents and newly built houses rose in the March quarter, while petrol and air fares fell.

Cigarettes and tobacco jumped 9.4 percent following an increase in excise duty in January.

“The average price of a pack of 25 cigarettes was $28.79 in the March 2016 quarter, more than double the price from six years ago when annual 10 percent excise tax increases were introduced,” Mr Haigh said.

Taking out cigarettes and tobacco, inflation actually fell 0.1 percent in the quarter. 

Petrol prices fell 7.7 percent, the largest downward contribution for the quarter.

Low oil prices and intense competition also contributed to lower airfares. International airfares fell 12 percent and domestic airfares 4.8 percent.

On an annual basis, inflation increased 0.4 percent, led by higher rents and building costs.

That followed a 0.1 percent in the December 2015 year, the lowest annual rate since 1999.

“Annual CPI inflation firmed to 0.4 percent, but was still the sixth consecutive out-turn below 1 percent and 18th successive sub-2 percent out-turn, “ANZ senior economist Mark Smith said.

The Reserve Bank has inflation well under control.

Surely Labour can find a crisis in there somewhere?


– Radio NZ

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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

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