Summary of consumers price index for the December 2018 quarter
The consumers price index is out today, and it shows that the inflation for the December 2018 quarter was 0.1 percent, and was 1.9 percent for the year to December.
Motorists will have noticed the big drops in the price of fuel at the pump at the end of last year. The price of crude oil fell during the December quarter and the exchange rate rose, both of which helped move pump prices downwards.
Interestingly though the average price of petrol between quarters only fell 0.6 percent.
This is because the CPI measures average prices across the whole quarter. Prices increased a lot over the September quarter and continued to go up into October, before falling a lot over the December quarter. So the average prices between quarters didn’t move much. That’s right.
But over the whole year fuel prices have done some interesting things in different parts of the country.
So in Auckland, the new regional fuel tax of 10 cents per litre plus GST was introduced at the beginning of July. This meant that since December 2017, fuel prices there increased 17 percent. And in fact average fuel prices in Auckland have caught up with, and are now slightly higher than, those in both Wellington and the South Island.
And the December quarter CPI also saw typical seasonal rises in international airfare prices, which were largely offset by seasonal falls in prices for vegetables. Gamers will have noticed prices for games, toys, and hobbies also contributed to the rise, driven by the release of some popular new and more expensive electronic article games during the quarter.
Smokers experienced the first small decrease in the price of cigarettes since 2009 in the December quarter.
Prices for cigarettes and tobacco fell 1.3 percent. But that’s off the back of a 160 percent increase over the past nine years. On average, smokers are now paying around $35 for a pack of 25 cigarettes. And that is before the 10 percent increase in excise tax took effect on the first of January.
Another interesting point from the December quarter was that telecommunications services rose 1 percent, running against the general trend of falling prices. Generally we see prices for telecommunciations services fall due to quality adjustments, as consumers gain from better speeds and higher capacity. However this quarter we’ve seen price increases for ADSL and VDSL network plans.
All of these factors contribute to the inflation rate for the December year of 1.9 percent, which was the same as the rate for the September year.