Key factors contributing to the inflation increase include surging food, power and housing costs.
Photo: RNZ
Consumer prices rise 0.5 pct in June quarter
Annual inflation rate 2.7 pct from 2.5 pct
Higher food, electricity, housing, rents, drive increase
Petrol, early childhood education, telco equipment fall
Bump in prices unlikely to prevent further RBNZ rate cuts
Inflation has edged to a 12 month high on the back of more expensive rents, rates, electricity and food, but remains in the Reserve Bank’s target band and is unlikely to prevent further rate cuts.
Stats NZ said the consumer price index rose 0.5 percent in the three months ended June, pushing the annual rose to 2.7 percent from 2.5 percent, the highest since June last year.
“Although the annual inflation rate has increased from the March 2025 quarter, it remains within the Reserve Bank’s… Target band of 1 to 3 percent – the fourth consecutive quarter it has done so,” senior manager of prices Nicola Growden said.
Rates, rents, power
Domestic prices – non-tradables – remained the backbone of inflation, rising 0.7 percent for the quarter and by 3.7 percent for the year, the slowest increase in four years.
Rates remained the single biggest driver, up 12.2 percent, still reflecting last year’s increases.
Rents rose 3.2 percent over the past year, but were increasing at the slowest rate in four years, while electricity prices were up 8.4 percent reflecting recent increases in lines charges.
The costs of purchasing a new house fell for the first time 14 years in the June quarter, because of competitive pricing and cheaper fit out costs, although were 0.8 percent higher for the year.
By comparison, the price of imported goods and services – tradables – rose 0.3 percent for the quarter and by 1.2 percent for the year, reflecting the high prices being gained for export food such as dairy, as well as more expensive overseas accommodation.
A notable feature of the quarter was a surge in the cost of streaming services.
The main offsets were cheaper petrol and telecommunications equipment.
The inflation numbers were a shade below economists’ expectations, although they have continued to forecast the annual rate going above the Reserve Bank’s (RBNZ) 1-3 percent target band.
Expectations are for the RBNZ to deliver a further cut to the official cash rate next month to 3-percent, with further cuts dependent on the state of the local economy and the broader global trade and growth outlook.
New Zealand’s inflation rate was higher than Australia and the European Union, matched that in the US, but was below the UK And the OECD’s average of 4 percent.
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