“The 6.9 percent increase follows an annual increase of 5.9 percent in the December 2021 quarter, the previous largest annual movement since the 7.6 percent increase in the June 1990 quarter,” Stats NZ said.
It was still lower than the seven percent inflation figure that economists were predicting.
The consumer price index rose 1.8 percent in the March quarter, mainly driven by soaring petrol prices that have since dropped.
The main driver of rising annual consumer costs was housing, influenced by homeownership, rising construction costs, and higher actual rents.
“Construction firms have been experiencing many supply-chain issues, higher labour costs, and also higher demand, which have pushed up the cost of building a new house,” said Aaron Beck, Stats NZ’s senior prices manager.
Construction prices increased 18 percent during the March quarter 2022 compared to the same quarter in 2021, the largest increase since the series began in 1985.
The next highest contributor was transportation, influenced by the prices of petrol and second-hand cars.
Unleaded 91 petrol peaked at an average weekly price of NZ$3.05 per litre (US$7.84 per gallon) in March before the government decreased fuel excise by 25 cents a litre.
Stats NZ also previously revealed on April 13 that food prices grew at its fastest rate in over a decade, led by an 18 percent growth in prices for fruit and vegetables.
Director of Woodhaven Gardens Jay Clarke said his business was facing unprecedented cost pressures in crop growing, such as the international price of fertiliser which has tripled.
“Cost pressure across the board is out of control,” he told the AM show.
Clarke noted that recent government policy also added more pressures, such as minimum wage increases and constraints on the labour market due to COVID-19 policies.
“I’m hoeing up iceberg lettuce by the hectare every day at the moment because the price the retailers are willing to pay for it is so far below our cost of production that we can’t justify sending it to market and that’s a tragedy—it’s wasted food,” he said.
Finance Minister Grant Robertson said the further increases in consumer prices was a reminder of the need for responsible fiscal policy.
“These are challenging times for the global economy with significant increases in food and fuel prices hitting all nations,” Robertson said.
“Chinese ports have been shut for long periods, adding to supply chain disruptions. New Zealand cannot be immune to these challenges and the government can’t control the price of food or petrol.”
But Robertson said NZ had a strong base to face the tough challenge, with unemployment at a record low 3.2 percent and exports increasing.
“There are no silver bullets for dealing with a situation like this,” he said. “Most economists are now forecasting for inflation to peak in the second quarter of the year and then start coming back down.”