New Zealand's inflation rate drops to 1.9 percent

WELLINGTON, New Zealand - New Zealand's annual inflation rate slowed to 1.9 percent for the period that ended June 30, the lowest increase in seven quarters, government statistics showed Thursday.

Statistics New Zealand said consumer prices rose 0.6 percent in the June 2009 quarter. But the 1.9 percent annual increase between June 2008 and June 2009 was the smallest since a 1.8 percent rise in the year ending September 2007.

New Zealand's inflation rate peaked at an 18-year high of 5.1 percent in the quarter ending September 2008 but has fallen as unemployment has risen and consumer spending slowed.

Food prices, which rose 0.9 percent, made the biggest upward contribution to last quarter's increase, government statistician Geoff Bascand said.

Higher prices for petrol, which rose 3.2 percent, and used cars (4.4 percent) were partly offset by a decrease in international air fares, down 14.4 percent for the quarter and 20.7 percent for the year. Transport prices fell 6.6 percent in the year to June 2009, Bascand said.

Housing and household utilities costs rose 0.4 percent in the June, 2009 quarter, led by electricity prices which rose 1.6 percent. The annual increase of 2.8 percent in the housing and utilities sector was the smallest annual increase since the year to March 2002.

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