Investing.com-- New Zealand consumer inflation grew at a slower pace in the December quarter, meeting expectations as high interest rates continued to deter spending, although the print still remained well above the Reserve Bank’s target range.

Housing, utilities and services prices remained the biggest drivers of inflation, as a tight New Zealand labor market kept spending relatively high. But easing food prices, amid stabler supply chains and softer import costs, helped bring down overall inflation.

Inflation still remained comfortably above the RBNZ’s 1% to 3% annual target range, giving the central bank more impetus to keep interest rates higher for longer.

The RBNZ hiked rates by a cumulative 525 basis points between late-2021 and late-2023, as it moved to curb the inflationary aftermath of the COVID-19 pandemic. It was among the first major global central banks to begin hiking rates in the wake of the pandemic.

But the bank’s efforts to stymie inflation were hampered by a series of natural disasters in the country- specifically two major cyclones at the beginning of 2023. Rebuilding efforts in the wake of the disasters contributed to higher inflation.

The central bank recently signaled that it will maintain interest rates at current levels for longer, until inflation falls within its target range. The RBNZ also flagged no immediate plans to begin trimming rates.