International securities regulations require that visitors read and acknowledge the disclaimer below before accessing information on this web site. Click Acknowledge and Hide Disclaimer below to hide the full disclaimer (requires JavaScript to be enabled).
Disclaimer - New Zealand Debt Management Office Web Site
- The information on this web site is issued by the New Zealand Debt Management Office (NZDMO) for informational purposes. It does not contain and is not an invitation or offer to buy or sell securities. Insofar as this web site refers to any offerings of securities, such offerings are directed to countries other than the United States and no offerings are made to persons accessing this web site within Australia.
- The NZDMO takes reasonable measures to ensure the quality of the data and other information produced by the NZDMO that is made available on this web site. However, the NZDMO makes no warranty, express or implied, nor assumes any legal liability or responsibility for the accuracy, correctness, completeness or use of any information that is available on or through this web site nor represents that its use would not infringe on privately owned rights. Further information contained on this web site is subject to change, completion or amendment without notice. Nothing contained on this web site is, or shall be relied on as a promise or representation by the New Zealand Government or the NZDMO as to the past or future. The contents of this web site should not be construed as legal, business or tax advice.
- This is a protected New Zealand Government web site. It is unlawful to intentionally cause damage to it or to any NZDMO electronic facility or data through the knowing transmission of any program, information, code, or command.
- The NZDMO systems to which this web site connects and related equipment are subject to monitoring. Information regarding users may be obtained and disclosed to authorised personnel, including law enforcement authorities, for official purposes. Access to or use of this web site constitutes consent to these terms.
- Reference to any specific commercial product, process, or service by trade name, trademark, manufacture, or otherwise does not constitute an endorsement, recommendation, or favouring by the New Zealand government or the NZDMO.
- For convenience and informational purposes only, the NZDMO server provides links to other web sites. These sites may contain information that is the copyright of third parties and subject to restrictions on reuse. Permission to use copyrighted materials must be obtained from the copyright owner and cannot be obtained from the NZDMO.
- The NZDMO is not responsible for the content of other web sites linked to or referenced from the NZDMO site. The NZDMO neither endorses the information, content, presentation, or accuracy of such web sites, nor makes any warranty, express or implied, regarding these external web sites.
- Each page on this web site must be read in conjunction with this disclaimer and any other disclaimer that forms part of it.
- By clicking on "Acknowledge and Hide Disclaimer" below, I confirm that I am either:
- resident outside of the European Economic Area; or
- person acting solely in my capacity as an authorised representative of an entity falling within one of the following descriptions:
- a legal entity authorised or regulated to operate in the financial markets, including: a credit institution, or investment firm, an other authorised or regulated financial institution, or insurance company, a collective investment scheme, a collective scheme management company, a pension fund, a pension fund management company, a commodity dealer, or an entity not so authorised or regulated but whose corporate purpose is solely to invest in securities;
- a national or regional government, a central bank, an international or supranational institution such as the International Monetary Fund, the European Central Bank, the European Investment Bank or other similar international organisations; or
- a legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts.
Disclaimer: The information on this web site is issued by the New Zealand Debt Management Office (NZDMO) for informational purposes. It does not contain and is not an invitation or offer to buy or sell securities. Each page on this web site must be read in conjunction with the disclaimer at http://www.nzdmo.govt.nz.
Prices and Costs
Consumer price inflation declined over the 1990s as monetary policy directed at maintaining price stability (introduced in 1989) took effect. Since September 1991, inflation has averaged 2.2% per annum. Inflation peaked at 5.1% in the year to September 2008 as a result of high fuel and food prices, before easing back to within the Reserve Bank's 1% to 3% target band during 2009.
Patterns of inflation vary between internationally tradable and non-tradable goods and services. Continued strength in the housing market and high energy costs, coupled with high capacity utilisation, contributed to non-tradables inflation averaging 4.3% from 2004 to 2007. A weakening housing market contributed to lower growth in residential construction costs and rents by the end of 2008, while easing capacity constraints reduced pricing pressures across the non-tradable sector more generally, with annual non-tradable inflation falling to an 8-year low of 2.3% in December 2009.
Tradables inflation remained low through to the end of 2007 due to the high New Zealand dollar relative to historical levels. Rapidly rising oil prices over the first half of 2008, coupled with increased food prices, resulted in higher tradables inflation through until September 2008, when it peaked at 6.3% on an annual basis. Since then, tradable inflation has eased considerably, with the most significant downward contribution coming from lower fuel prices, resulting in annual tradable inflation of 1.5% in the year to December 2009.
Annual inflation measured 2.0% in the year to December 2009. Inflation is expected to increase slightly, in line with the economic recovery, but remain within the Reserve Bank's target on average over the medium term. The moderate inflation outlook reflects higher tradable inflation (owing to an expected lower exchange rate), offset by lower non-tradable inflation (reflecting continuing spare capacity in the economy).
A weakening exchange rate, coupled with record-high oil prices, drove producer price inflation for inputs up from 0.7% in June 2007 to 13.6% in September 2008. In the year to September 2009, the rate of producer price inflation eased rapidly to 5.8%, reflecting significantly lower oil prices. Input price inflation is expected to remain subdued in the near term, reflecting the rapid appreciation of the currency since March 2009.
Wage growth trended upwards in the eight years to 2008, reflecting a tight labour market and a period of higher than average inflation. Growth in the index of salary and ordinary-time wage rates peaked at a record 3.9% in the year to September 2008 before declining rapidly over the following year, recording just 2.1% in the year to September 2009. Growth rates are expected to continue to soften over 2010 and remain under 3% in the medium term, consistent with unemployment remaining higher than in recent years and the expected modest inflation over the forecast horizon.
The following table shows on a quarterly basis the Terms of Trade Index, the Producers Price Index, the Consumers Price Index, and the Labour Cost Index and, in each case, the percentage change over the same quarter of the previous year:
| Terms of Trade Index (1) |
Producers Price Index (2) |
Consumers Price Index (3) |
Labour Cost Index (4) |
||||||
|---|---|---|---|---|---|---|---|---|---|
| 2005 | March | 1,105 | 4.5% | 1,185 | 3.7% | 953 | 2.8% | 875 | 2.5% |
| June | 1,091 | 1.0% | 1,210 | 3.9% | 962 | 2.8% | 881 | 2.6% | |
| September | 1,087 | 0.9% | 1,240 | 5.4% | 973 | 3.4% | 891 | 3.1% | |
| December | 1,060 | (1.9%) | 1,251 | 5.5% | 979 | 3.2% | 898 | 3.1% | |
| 2006 | March | 1,069 | (3.3%) | 1,264 | 6.7% | 985 | 3.3% | 904 | 3.2% |
| June | 1,097 | 0.5% | 1,301 | 7.5% | 1,000 | 4.0% | 909 | 3.2% | |
| September | 1,073 | (1.3%) | 1,319 | 6.4% | 1,007 | 3.5% | 919 | 3.2% | |
| December | 1,100 | 3.8% | 1,305 | 4.3% | 1,005 | 2.6% | 927 | 3.2% | |
| 2007 | March | 1,117 | 4.5% | 1,296 | 2.5% | 1,010 | 2.5% | 932 | 3.2% |
| June | 1,122 | 2.3% | 1,312 | 0.8% | 1,020 | 2.0% | 938 | 3.2% | |
| September | 1,163 | 8.4% | 1,344 | 1.9% | 1,025 | 1.8% | 947 | 3.1% | |
| December | 1,197 | 8.8% | 1,361 | 4.3% | 1,037 | 3.2% | 957 | 3.2% | |
| 2008 | March | 1,247 | 11.6% | 1,390 | 7.3% | 1,044 | 3.4% | 964 | 3.4% |
| June | 1,242 | 10.7% | 1,473 | 12.3% | 1,061 | 4.0% | 972 | 3.6% | |
| September | 1,230 | 5.8% | 1,527 | 13.6% | 1,077 | 5.1% | 984 | 3.9% | |
| December | 1,218 | 1.8% | 1,493 | 9.7% | 1,072 | 3.4% | 991 | 3.6% | |
| 2009 | March | 1,185 | (5.0%) | 1,455 | 4.7% | 1,075 | 3.0% | 997 | 3.4% |
| June | 1,074 | (13.5%) | 1,455 | (1.2%) | 1,081 | 1.9% | 1,000 | 2.9% | |
| September | 1,061 | (13.7%) | 1,439 | (5.8%) | 1,095 | 1.7% | 1,005 | 2.1% | |
| December | N/A | N/A | N/A | N/A | 1,093 | 2.0% | 1009 | 1.8% | |
(1) Base: June quarter 2002 = 1,000.
(2) All industry inputs. Base: December quarter 1997 = 1,000.
(3) Base: June quarter 2006 = 1,000.
(4) All industry ordinary time salary and wage. Base: June quarter 2001 = 1,000.
