New Zealand’s inflation rate has climbed to 3.1%, according to official data released by Stats NZ today, marking the highest annual increase since the June 2024 quarter, when inflation stood at 3.3%.
According to a report by 1News, the rise in the 12 months to the December quarter comes after a 3.0% increase recorded in the year to the September 2025 quarter. The latest figure places inflation slightly above the Reserve Bank of New Zealand’s target range of 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, 1News has quoted.
Electricity prices were the biggest contributor to annual inflation, rising 12.2% over the year. Stats NZ said electricity accounted for 10.3% of the overall 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, 1News has quoted.
Local authority rates and payments rose 8.8% in the December 2025 quarter, contributing 8.7% to the annual inflation figure. Rent increased by 1.9%, making up 6.9% of the overall rise.
Rising food and travel costs also added pressure on household budgets. Meat and poultry prices increased by 8.2%, while milk, cheese and eggs rose by 9.8%. Overseas accommodation costs were up 9.1% over the year. Telecommunications services also saw an annual increase of 7.0%.
Despite widespread price rises, some categories recorded declines, including pharmaceutical products, audio-visual equipment, and games, toys and hobbies.
Stats NZ noted that more than 80% of items in the Consumer Price Index (CPI) basket rose in price over the past year, the highest proportion seen in 18 months, as reported by 1News.
"Over half of the CPI basket increased in price by 3.0% or less," Growden said, as quoted by 1News.
On a quarterly basis, inflation rose by 0.6% in the December 2025 quarter compared with the September 2025 quarter.
International airfares were the largest contributor to the quarterly increase, climbing 7.2% and accounting for around one-fifth of the total rise.
"Prices for international air transport typically increase during the New Zealand summer holidays as demand for overseas travel picks up," Growden said, 1News has quoted.
Higher airfares to Asia, Australia and Africa were the main drivers of the increase during 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, as reported by 1News.
Lower vegetable prices helped ease some of the upward pressure, with prices falling 16.5% due to cheaper tomatoes, cucumber, capsicum, lettuce and broccoli.
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