NZ extends cut in fuel excise duty amid inflation woes

New Zealand will extend the duration of cuts in fuel excise tax and public transport fares until the end of June, Prime Minister Chris Hipkins said on Wednesday, in a bid to provide relief to families struggling with higher living costs.

Official data out last week showed New Zealand's consumer inflation held near three-decade highs in the fourth quarter with prices rising for house construction and household utilities, and food costs on an upward trajectory.

Petrol prices in New Zealand, like elsewhere, have risen sharply since Russia's attack on Ukraine started around a year ago, contributing to significant inflation.

"I've said bread-and-butter issues like the cost of living would be my top priority," said Hipkins, who last month was elected the country's leader in the wake of Jacinda Ardern's resignation and could face a national election in October.

"This is our first step in dealing with some of the persistent cost pressures on businesses and families."

Cutting fuel excise and keeping half-price public transport will give extra relief for the flood-hit residents in the country's largest city of Auckland, Hipkins said.

The Labour government in March 2022 introduced the cut in fuel excise tax by 25 cents and the temporary measure has been extended three times.

The measures will reduce the cost of filling up a 60-litre tank of petrol by US$11.10 (about RM47), Hipkins said. Discounts on road user charges - a charge levied on diesel vehicle users - have been re-introduced and will continue through June 30.

The measures are expected to cost about NZ$718 million, Finance Minister Grant Robertson said.

"With economists forecasting New Zealand's inflation to remain at elevated levels for longer than we've seen in the past, we have decided to revisit our decision on the transport support package," Robertson said.