New Zealand inflation hits 2.2% in first quarter, highest in five years

[WELLINGTON] New Zealand's consumer price index (CPI) finally hit the central bank's target mid-point of around 2 per cent annual growth in the first quarter, after more than a year of concerted effort to lift tepid inflation.

The CPI rose one per cent from the previous quarter, according to Thursday's report from Statistics New Zealand, leading to annual inflation of 2.2 per cent.

The New Zealand dollar rose to US$0.7033 in the wake of the release from around US$0.7000.

Economists polled by Reuters had forecast the CPI to rise 0.8 per cent for the quarter, with an annual increase of 2 per cent.

The result was the highest annual rise in five yers and the first time since 2011 the inflation had hit the middle of the Reserve Bank of New Zealand's target band of one to 3 per cent.

The bank was thought unlikely to budge from its stance of keeping rates at 1.75 per cent, possibly for years to come, to ensure inflation remained strong.

The rise was largely attributed the effects of booming construction and migration, as well as temporary gains from higher oil prices and a tax hike on alcohol and tobacco.

REUTERS