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New Zealand inflation muted in March quarter

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(Globalpost/GlobalPost)

New Zealand's inflation was a modest 0.4 percent in the January-March quarter, increasing the prospect that interest rates will remain on hold for the next 12 months, analysts said Wednesday.

Statistics New Zealand said the 0.4 percent jump in the cost of living for the three months to March, in line with market expectations, was largely caused by an 11 percent rise in cigarette and tobacco prices after a tax hike.

Inflation rose 0.9 percent in the 12 months to March 31, just below the Reserve Bank of New Zealand's target band of 1.0-3.0 percent.

The central bank has already predicted the official cash rate (OCR) will remain at a record low of 2.5 percent for the rest of the year, amid tepid economic growth and a surging New Zealand dollar.

ASB economist Christina Leung said the inflation outlook meant rates were unlikely to change in the short-term.

"We continue to expect the RBNZ will leave the OCR unchanged until March 2014," she said.

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http://www.globalpost.com/dispatch/news/afp/130416/new-zealand-inflation-muted-march-quarter