An economist says New Zealand will likely see inflation rise over the coming years as communities rebuild from the destruction caused by Cyclone Gabrielle.
The cost of damage following the cyclone is estimated to be around $13 billion, according to Finance Minister Grant Robertson.
Economist Christina Leung told Breakfast that wealth loss and supply chain disruptions would be the leading drivers of inflation following the event.
The damage to property across affected regions means wealth loss is likely to hit hard.
"First and foremost, it is a wealth loss; while there will be rebuilding activity that takes place over the coming years that will underpin growth… it is still a loss of activity and lives," she said.
"We're starting from the lowest point in terms of where the economy is."
When it comes to supply chain pressures, this will affect the construction industry, Leung said.
"There will be impacts on inflation in the short term; we will see upward prices from the disruptions to supply chains.
"Over the coming years, particularly in the construction sector, they're already grappling with a lot of capacity pressures as the rebuild takes place.
"We're likely to see that become exacerbated and put upward pressure on construction prices and a broader range of more inflation generally."
Leung predicts inflation would start in the most affected regions and then move out to the rest of the country as time passes.
She used the Christchurch earthquake as an example; regional inflation occurred following that disaster.
"There is a sharp increase in where the regions are affected, but then later on, you do tend to see that inflation broadens across the regions," she said.
"But certainly, those regions impacted are where you'll see those price increases most concentrated."
Leung said that the country's economy would need to adapt to climate change in the future as more extreme weather events are expected to come.
She said infrastructure needs to be rebuilt with climate change in mind.
"It's about how we make the economy a lot more resilient against these large events and how we can rebuild infrastructure so we don't have those impacts we've seen in recent weeks," she said.
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