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NZ inflation falls unexpectedly

The consumer price index (CPI) fell unexpectedly by 0.2 per cent in the final quarter of last year, raising the likelihood of either a central bank interest rate cut or a longer period of current historic low interest rates.

The New Zealand dollar immediately fell on the announcement at 10.45 am to 83.52 US cents from 84.15 cents just prior to the release.

Market expectations had been for a 0.1 per cent increase.

The annual inflation rate for calendar 2012 was 0.9 per cent, up from 0.8 per cent in the year to September.