Rent increases slow

That is of cold comfort to landlords struggling with increasing tax and other costs.

Rents rose by 0.9% in the December quarter and are up 4.4% over the past year. Rent  is the biggest single item in the Consumers Price Index, accounting for just under 10% of the basket. The CPI rose 1.4% in the December quarter to 7.2% over the past year, slightly down on the previous quarter.

Economists are predicting the Reserve Bank might not need to hike the OCR by 75 basis points next month to bring inflation under control and could look at a 25 or 50 basis point rise instead.

Apart from rent being a major contributor to inflation, housing costs are adding to the pressure, says Westpac senior economist Satish Ranchhod. The December had 2.1% increase in the cost of buying a newly built home., with cost up 14% over the past year.