GOVERNMENT EMPHASISES IMPORTANCE OF STABLE ECONOMIC ENVIRONMENT

Deputy Prime Minister and Treasurer Winston Peters welcomed the annual June CPI figure of 1.7%, saying it was fully in line with official and market expectations.

"It is clear from the figures that New Zealand has a low inflation environment which is crucial for the success of New Zealand businesses," said Mr Peters.

He noted that a fall in petrol prices, the removal of vehicle tariffs on Budget night and a significant reduction in telephone charges had contributed towards the June quarter figure of 0.3%.

Mr Peters said the Coalition Government's economic policies had focused on creating a stable economic environment through sensible financial management and continuing reform.

"This commitment to sensible financial management is reflected in our recent decision to increase the size of the fiscal buffer in the light of international developments.

"With declining interest rates and the competitive exchange rate, New Zealand firms are well placed to face the current economic challenges, and this will be reflected in steadily improving economic growth over the next two years," said Mr Peters.