Price inflation rises to 3.1%, above the Reserve Bank’s target range

Friday, 23 January 2026

New Zealand's annual inflation rate has risen to 3.1%, a figure that is no longer within the Reserve Bank's official target range of between 1-3%.

It marked the fourth time in a row that the Consumer Price Index (CPI) - Statistics New Zealand's official measure of inflation - had risen.

The news was a hard pill to swallow for retailers, Retail NZ chief executive Carolyn Young said in a statement.

“Today’s announcement is further disappointment for the retail sector with continued increases in inflation over the last 12 months, making it difficult for New Zealanders to manage household spending,' Young said.

'We know that consumers have seen significant increases in core expenses such as rates, electricity, telecommunications, insurance and grocery prices, which keeps eating away at the confidence of consumers and their ability to get ahead.'

'That has a direct impact on discretionary spending as witnessed in the 0.5% decline in spending for December 2025 announced yesterday.'

The December quarter CPI result followed a 3% increase in prices in the previous September quarter, and 2.7% rise in the 12 months to June.

The 3.1% annual inflation rate for the December quarter was the highest since the June quarter in 2024.

The latest increase was driven mostly by higher prices for electricity, local council rates and rents, although rent rises have slowed.

“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’s Nicola Growden said on Friday.

“Annual electricity increases remain at their highest since the late 1980s, when there were several major reforms in the electricity market.”

It comes after figures showed the New Zealand economy grew 1.1% in the three months to September, following a 1% decrease in the previous June quarter.

‘Highest proportion of increases in 18 months’

Electricity prices increased 12.2% in the December quarter, while local council rates rose 8.8%, and rents increased 1.9%. Other significant contributors were meat and poultry up 8.2%, and telecommunication services up 7%. Petrol prices also increased 2.5%.

“More than 80% of the CPI basket increased in price over the past year - the highest proportion of increases recorded in 18 months,” Growden said.

“Over half of the CPI basket increased in price by 3% or less.”

The inflation rate was offset by decreases in the price of pharmaceutical products, audio-visual equipment, as well as games and toys.

The price of pharmaceutical products decreased 9.4%, which was attributed to changes in the cost of prescriptions. The cost of audio-visual equipment was down 18.5%. Lower prices were also recorded for vegetables, down 16.5%.

How NZ’s inflation rate compares

New Zealand 3.1%

Australia 3.4%

United Kingdom 3.6%

United States 2.7%

European Union 2.3%