By Lucy Craymer
WELLINGTON, July 21 (Reuters) - New Zealand's annual inflation accelerated in the second quarter to a 2-1/2-year high, reinforcing expectations the central bank will raise the cash rate when it next meets in September.
Data released by Statistics New Zealand on Tuesday showed annual inflation at 4.1%, above analysts' forecasts of 4.0% and the Reserve Bank of New Zealand's latest projection of 3.9% for the quarter.
The consumer price index rose 1.5% in the second quarter from the previous
quarter, Statistics New Zealand said. Economists polled by Reuters had expected a 1.4% quarterly rise.
The New Zealand dollar rose 0.1% to $0.5843, while 2-year swaps climbed 3 basis points to 3.681%, after annual inflation came in above the central bank's forecast.
Westpac senior economist Satish Ranchhod said the result was not as worrying as the RBNZ might have feared as core inflation had softened "but inflation is still high."
Westpac expects further cash rate hikes at the September and December meetings.
The central bank raised the cash rate for the first time in three years to 2.50% earlier this month and signalled further tightening ahead, saying it must do more to bring inflation back to target as the economy rebuilds. It said at that meeting it expected inflation to ease to 3.3% in the third quarter as the boost from oil price rises linked to the Middle East war fades from the headline rate.
The sharp rise in fuel prices since the start of the Middle East war was the main driver of the spike in prices.
Statistics New Zealand said the largest contributor to inflation was petrol, which was up 27.5%, while diesel prices were up 71.1%.
It added that if petrol and diesel prices had not changed, the CPI would have risen 2.9% in the 12 months to June 30.
Annual non-tradeable inflation was 3.4%, its lowest level in five years and down from 3.5% in the first quarter.
Globally, inflation pressures remain uneven and highly exposed to the energy shock. U.S. inflation slowed more than expected in June as gasoline prices retreated, while in Europe, European Central Bank accounts showed policymakers saw inflation staying above target into next year despite nearly three expected rate hikes.
(Reporting by Lucy Craymer; Editing by Lincoln Feast.)
