New Zealand Under Pressure as Inflation Soars up to 32-Years High

New Zealand Under pressure as Inflation Soars Up to 32-Years High
  • Annual inflation rate exceeds the central bank’s prediction, rising to 7.3%.
  • The price of constructing a new dwelling increases by 18% in a year.

According to government data, the annual inflation reached a new 32-year high, increasing from 6.9% in the first quarter to 7.3%. Analysts predicted a 7.1% growth rate over the previous three months. Consumer prices increased by 1.7% beating the average forecast of 1.5%.

The previous highest annual inflation moment was a 7.6% increase in the June 1990 quarter, which drove the country soon after implementing the Reserve Bank of New Zealand Act 1989.

Inflation Rising Over the Country 

Consumer price index compared with 1990 (Source: stats NZ)

During the COVID-19 epidemic, inflation has skyrocketed over the world due to monetary stimulation and the war in Ukraine and Russia promptly rising demand. To control price increases, central banks are rapidly boosting interest rates. Last week, The Official Cash Rate in New Zealand increased by a half percentage, reaching 2.5%.

The price for construction of new dwellings increased by 18% in the previous year and by 4.5% increased for the quarter. For the year and quarter, gas prices increased by 32% and 6.2%. The food price rose by 6.5% in the year and 1.3% in the quarter. 

Prices for tradable goods climbed by 1.9% from the prior quarter and by 8.7% annually. Prices for non-tradable goods increased 6.3% from a year earlier and by 6.3% in the past quarter. Consumer prices that do not include food, gasoline, or energy increased by 6.1% over the previous year. 

A hike in interest rates might have a significant negative effect on the cryptocurrency industry, which had a stressful year. To put things into perspective, the Terra ecosystem collapsed, and Celsius Network’s suspension on Withdrawal sent shockwaves across the market.

A journalism graduate who is passionate about writing loves to dance and travel currently starts exploring blockchain technology.