New Zealand inflation rate at 21-year high

New Zealand's inflation rate hit a 21-year high in the 12 months to June, as rising fuel and food prices pushed up the cost of living, official data released Monday showed. Statistics New Zealand said consumer prices increased 1.0 percent in the April-June quarter, taking the annual inflation rate to 5.3 percent, the highest since the June quarter in 1990. The quarterly figure exceeded market forecasts of an 0.8 point increase, sending the New Zealand dollar up 0.3 US cents to 84.48 US cents amid expectations the central bank will lift interest rates to combat inflation. "The stronger-than-expected increase for 2Q suggests inflation is not as benign as the RBNZ (Reserve bank of New Zealand) would like," ASB Bank economist Christina Leung said in a note to clients. The Reserve Bank, which lowered interest rates to 2.5 percent to stimulate growth following the devastating Christchurch earthquake in February, has an annual inflation target of 1.0-3.0 percent. Analysts had not expected rates to rise until about March next year but the high inflation figure, coupled with unexpectedly strong economic growth of 0.8 percent in the March quarter, means some are now tipping a hike in December. Statistics New Zealand said the price of petrol increased 4.0 percent during the June quarter, while food prices rose 1.1 percent, including a 6.7 percent hike in the cost of vegetables.