Rising petrol, building, and energy costs will drive NZ inflation to about 2.5 per cent in the June year.
Monday, July 12th 2004, 8:08AM
by The Landlord
Inflation will run close to 1 per cent in the June quarter. Economists say it would have to be much lower to derail an expected interest rate hike at the end of July.
June quarter inflation figures are due out on Thursday.
Several economists expect inflation of 0.9 per cent or 1 per cent for the quarter, and about 2.6 per cent for the year.
Westpac said 2.6 per cent would be a "pronounced leap" from the 1.5 per cent a year seen in the March year, leaving little inflation headroom for the Reserve Bank below its 3 per cent target.
Any quarterly inflation figure between 0.7 per cent and 1.1 per cent would leave the Reserve Bank looking at still further interest rate rises in the year ahead.
The Reserve Bank is expecting annual inflation to hit 3 per cent early next year, especially with faster March quarter economic growth than expected, and booming commodity prices.
Even if the dollar remained at close to US66 cents it would only partly offset the inflation fears. Official interest rates were likely to rise twice, to 6.25 per cent.
