Consumer price index down

"The CPI has fallen in four of the past five December quarters – the exception being 2010, after the GST increase," prices manager Chris Pike says.

Lower prices for food (down 1.8%), household contents and services (down 1.8%), and communication (down 2.0%) were the main contributors to this quarter's fall. These were partly offset by rises for housing and household utilities and for transport – both up 0.6%.

The fall in food prices was due to seasonally lower vegetable prices (down 16%). Prices for tomatoes, lettuce, and capsicums were about half what they had been in the previous quarter.

The fall for household contents and services was largely due to lower prices for furniture and furnishings (down 6.2%), reflecting higher levels of discounting. "One in four furniture and furnishing prices was discounted in the December quarter, compared with one in five in the September quarter," Pike says.

Petrol prices (down 0.8%) also fell in the December 2012 quarter. They are now 1.7% below their June 2012 quarter peak.

Increases for housing and household utilities reflected higher prices for property maintenance services (up 2% due to seasonally lower government subsidies for insulation and heating), rentals for housing (up 0.3%), and purchase of newly built houses (up 0.5%).

Higher transport prices were influenced by a rise in international air fares (up 9.8%). This is the largest quarterly rise since the December 2009 quarter, when fares rose 14%. "International air fares usually rise in December quarters. This quarter's rise reflects seasonally higher fares to Asia, and higher fares to Australia after a dip in the September 2012 quarter," Pike says.

Annually, the CPI increased 0.9% in the year to the December 2012 quarter, due to increased prices for cigarettes and tobacco (up 13%), rentals for housing (up 2.4%), and electricity (up 5.2%). These movements were partly offset by decreases in the price of telecommunication services (down 5.7%), audio-visual equipment (down 17%), and fresh milk (down 9.5%).

The CPI measures the rate of price change of goods and services purchased by New Zealand households. Statistics NZ visits 3000 shops across New Zealand to collect prices for the CPI and check product sizes and features.