New Zeeland CPI lower in Q2. A rate cut is coming?

Inflation in New Zealand was up 0.4 percent on year in the second quarter of 2016, Statistics New Zealand said on Monday.

That was beneath forecasts for 0.5 percent, although it was unchanged from the previous three months.

Housing-related prices continued to be the main upward contributor, up 3.3 percent in the year. This increase was influenced by higher prices for newly built houses, excluding land (up 5.6 percent), and rentals for housing (up 2.3 percent).

Transport prices made the largest downward contribution, down 5.3 percent in the year as prices for petrol and domestic air fares fell.

"Petrol prices were 8.1 percent lower than a year ago, despite the increase this quarter as international crude oil prices recovered from their February low," consumer prices manager Matt Haigh said. "Petrol makes up around 5 percent of the CPI basket."

Excluding petrol, the CPI showed a 0.8 percent increase on year.

On a quarterly basis, inflation was also up 0.4 percent versus expectations for 0.5 percent and up from 0.2 percent in the three months prior.

"Higher petrol and housing-related prices were countered by lower prices for meat and domestic air fares," Haigh said.

Petrol prices showed the largest upward contribution, up 5.3 percent in the June 2016 quarter. This follows falls of 7.7 percent in the March 2016 quarter and 7.0 percent in the December 2015 quarter.

The average price of one liter of 91 octane petrol was NZ$1.78 in the June 2016 quarter. This follows falls of 7.7 percent in the March 2016 quarter and 7.0 percent in the December 2015 quarter.

The average price of one liter of 91 octane petrol was NZ$1.78 in the June 2016 quarter, up from NZ$1.69 in the March 2016 quarter.

Excluding petrol, the CPI rose 0.2 percent in the June 2016 quarter.

Housing and household utilities prices rose 1.0 percent in the June 2016 quarter. This rise was influenced by higher prices for newly built houses, excluding land (up 2.1 percent), electricity (up 1.8 percent), and rentals for housing (up 0.6 percent).

Meat prices (down 2.7 percent) made the largest downward contribution for the latest quarter, followed by lower prices for domestic air fares (down 9.9 percent). Domestic air fares have fallen 14 percent since the December 2015 quarter.