WELLINGTON, New Zealand (AP) - New Zealand's inflation rate hit 2.5 percent in the year ended Sept. 30, fueled by rising house prices, new figures showed Friday.
Government-funded Statistics New Zealand said the Consumer Price Index rose 0.6 percent in the three months to the end of September - meeting private sector economic forecasts.
Economists believe the figures will support central bank plans to raise benchmark interest rates for the sixth time in 2004 at its rates review on Oct. 28 as it moves to slow the economy and dampen rising inflation.
The benchmark rate currently stands at 6.25 percent.
The Reserve Bank, which had forecast a 0.5 percent inflation rise for the September quarter, expects inflation to rise above its 1-3 percent target inflation band in the first half of next year.
Economists expect the economy to begin to slow down by December.
Housing prices were up 1.6 percent in the quarter, making them the biggest contributor to the CPI's rise for the ninth consecutive quarter, the agency said.
Higher international fuel prices saw transport costs rise 0.5 percent in the three months, mainly due to fuel surcharges imposed on ticket prices by airlines.
Over the year petrol prices were up 11.9 percent and construction prices rose 9 percent.
Also pushing the index higher was a 2.2 percent rise in the price of alcohol and tobacco.
ANZ Bank economist John Bolsover said the numbers gave no comfort to the Reserve Bank, with market surveys showing ongoing price pressures from an over-stretched labor market and full capacity utilization by industry.
"It's just another in a string of strong releases,'' he said. - AP