New Zealand: Air fares tumble, keeping NZ inflation low despite rising petrol prices

A sharp drop in the price of domestic air fares kept inflation well below target, despite a recovery in petrol prices. Statistics New Zealand announced Monday that the consumer price index rose by 0.4% in the June quarter, meaning annual inflation also remained at 0.4% for the year to June 30. Much of the gain came from a recovery in petrol prices, which rose 5.3% in the 3 months to June 30. Petrol, which accounts for about 5% of the overall inflation basket, dropped significantly in both the December and March quarters. But the recent gains in petrol were offset by drops elsewhere, including a 9.9% drop in domestic air fares. Domestic air fares are down 14% since the start of the year. Figures from the department showed that domestic air fares are now almost exactly what they were back in mid-2006. <br/>