The latest figures from Stats NZ reveal the annual inflation rate has increased 6.7% in the 12 months to March 2023.
It follows a 7.2% increase in the 12 months to December 2022.
Most economists predicted an increase of around 7%.
"Inflation is still at levels not seen since the 1990s," Stats NZ consumer prices senior manager Nicola Growden said.
Food was the largest contributor to the March 2023 inflation rate due to rising prices for vegetables, ready-to-eat food, and milk, cheese and eggs.
It follows a 7.2% increase in the 12 months to December 2022. (Source: 1News)
Vegetable prices increased 22% in the 12 months to March 2023, while ready-to-eat food and milk, cheese and eggs increased 9.7% and 15%, respectively.
The second largest contributor was housing and household utilities, which was attributed to rising prices for construction and rent.
Prices for building a new house increased 11% in the 12 months to March 2023, following a 14% increase in the 12 months to December 2022.
Rents, meanwhile, increased 4.3% in the 12 months to March 2023. It follows an increase of 4.4% in the 12 months to December 2022.
The third largest contributor was recreation and culture, which was driven by rising prices for domestic accommodation services and pets and pet-related products, such as pet food.
The increases were slightly offset by a decrease in petrol, down 8.3% in the 12 months to March 2023, following a 2.4% increase in the 12 months to December 2022.
Consumer price index rises 1.2%
The Consumers Price Index (CPI) rose 1.2% in the March 2023 quarter – the lowest quarterly increase since March 2021.
The CPI is a measure of inflation for New Zealand households. It records changes in the price of goods and services and influences interest rates and is used to calculate changes to benefit payments.
It was influenced by rising prices in food, alcoholic beverages and tobacco, as well as housing and household utilities groups.
Fruit and vegetables were the largest contributors to food prices, up 8.6% and 11%, respectively.
Meanwhile, the annual tobacco tax increase on January 1, 2023 lifted cigarette and tobacco prices 7.6% in the March 2023 quarter.
"The average price of a pack of 25 cigarettes was $48.71 in March 2023. One cigarette now costs about $1.95. Ten years ago, cigarettes cost about 83 cents each," Growden said.
Cost of living 'major focus' in upcoming budget
Finance Minister Grant Robertson said today in a statement while inflation has come in lower than all market predictions, the Government "is committed to bringing down the cost of living and supporting New Zealanders through these difficult times".
"While lower than expected, today's result is still elevated by the impact of flooding and cyclone events on food prices, with prices increasing 8.6% for vegetables. The prices of second-hand cars and insurance were also elevated. The effects of the cyclone will flow through into the June quarter results as well," he said.
Robertson said the Government is "taking a range of actions to ease the pressure on families", including an increase in benefits and the minimum wage earlier this month, an extension of the fuel tax cuts and half-price public transport.
"The cost of living is the main challenge right now in the economy and will be a major focus in May's budget. Our policy repriorisation review has netted $1 billion in savings so we can do more to support New Zealanders at this challenging time.
"We understand that Kiwis are doing it tough. We will continue to work hard to ease the pressure families are under while making sure we invest in the recovery and rebuild from the cyclone as well as deliver the strong public services that New Zealanders can rely on and build a stronger and more resilient economy."
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