By Lucy Craymer
WELLINGTON, Jan 23 (Reuters) - New Zealand's annual inflation accelerated in the fourth quarter to 3.1%, edging above the central bank's target range and reinforcing policymakers' recent decision to signal an end to their monetary easing cycle as the economy slowly picks up.
The consumer price index rose 0.6% in the fourth quarter from the previous quarter, Statistics New Zealand said.
Economists polled by Reuters had expected a 0.5% quarterly rise and a 3.0% annual increase.
The Reserve
Bank of New Zealand targets annual inflation between 1% and 3% over the medium term.
Statistics New Zealand said the key inflation drivers were rises in electricity prices, local authority taxes and housing rents.
The RBNZ in November forecast annual inflation at 2.7% for the quarter and signalled an end to the easing cycle, on signs that growth was picking up.
It cut the cash rate by 25 basis points at its latest meeting to 2.25%, taking its total easing to 325 basis points since August 2024 in response to persistent weakness in the economy.
It noted at the time that while inflation was at the top of its band, it expected a return to around 2% by the middle of this year.
"While the annual inflation rate has slowed considerably since its most recent peak of 7.3% in the June 2022 quarter, it has increased each quarter since the December 2024 quarter,” Statistics New Zealand spokesperson Nicola Growden said on Friday.
Annual non-tradeable inflation was 3.5%.
Uncertainty around U.S. tariff policies and geopolitical tensions continue to influence inflation expectations and monetary policy decisions.
The government, which this week announced a general election in November, is banking on inflation tempering as it aims to convince New Zealanders that it is a safe pair of hands to manage the economy.
(Reporting by Lucy Craymer; Editing by Edmund Klamann)
