New Zealand inflation rate slows to a crawl

[WELLINGTON] New Zealand's annual inflation rate fell to 1.0 per cent in the 12 months to September, official data showed Thursday, dampening expectations of interest rate hikes for the rest of 2014.

Statistics New Zealand said the cost of living rose just 0.3 per cent in the July-September quarter, well below market forecasts of 0.5 per cent, as transport costs fell and food prices remained flat.

That put annual inflation at 1.0 per cent, the bottom end of the Reserve Bank of New Zealand's 1.0-3.0 per cent target range, giving the central bank leeway to keep rates on hold in the short to medium term.

The bank has already flagged a pause in monetary policy tightening as it takes stock after lifting its base rate from 2.5 per cent to 3.5 per cent between March and July this year.

The bank is set to review its policy next week but analysts do not expect any further rise in interest rates until March next year at the earliest.

AFP