Inflation has increased by 3.1% according to official figures released by Stats NZ today - the highest annual rate since the June 2024 quarter, when it was 3.3%.
The increase in the 12 months to the December quarter followed a 3.0% rise in the 12 months to the September 2025 quarter.
The Reserve Bank of New Zealand’s target band for the annual inflation rate is 1 to 3%.
"While the annual inflation rate has slowed considerably since its most recent peak of 7.3% in the June 2022 quarter, it has increased each quarter since the December 2024 quarter, when it was 2.2%," Stats NZ prices and deflators spokesperson Nicola Growden said.
The largest contribution to annual inflation was electricity, which was up 12.2%. According to Stats NZ, electricity contributed to 10.3% of the 3.1% annual increase.
"Annual electricity increases remain at their highest since the late 1980s, when there were several major reforms in the electricity market," Growden said.
Local authority rates and payments were up 8.8% in the December 2025 quarter, contributing 8.7% to the 3.1% increase, while rent was up 1.9%, contributing 6.9%.
Food and travel costs also added pressure, with meat and poultry up 8.2%, milk. cheese and eggs rising 9.8%, and overseas accommodation increasing by 9.1%.
Telecommunications services were up 7.0% over the year.
Some prices fell, including pharmaceutical products, audio-visual equipment and games, toys, and hobbies.
More than 80% of items in the CPI basket increased in price over the past year, the highest proportion in 18 months.
"Over half of the CPI basket increased in price by 3.0% or less," Growden said.
Quarterly inflation at 0.6%
Inflation rose 0.6% in the December 2025 quarter when compared to the September 2025 quarter.
International airfares were the biggest contributor, climbing 7.2% and accounting for one fifth of the quarterly increase.
"Prices for international air transport typically increase during the New Zealand summer holidays as demand for overseas travel picks up," Growden said.
Airfares to Asia, Australia and Africa drove the increase in the December 2025 quarter.
Petrol prices also rose 2.5% over the quarter, with the average price of 91 octane fuel increasing from $2.54 per litre in the September 2025 quarter to $2.61 per litre in the December 2025 quarter.
Lower vegetable prices, down 16.5%, helped offset some of the quarterly rise, with cheaper tomatoes, cucumber, capsicum, lettuce and broccoli contributing to the fall.
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