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<\/p>\nAnnual inflation has dipped to 3.7% in the September quarter, Stats NZ has announced this morning.<\/p>\n
The Stats NZ figure is down from 4.1% in the June quarter, but economists warn the dip is likely to be short-lived, with inflation expected to climb again in the next quarter.<\/p>\n
Petrol was the biggest driver of the annual rise, with prices up 19.1% on a year earlier. Without the jump at the pump, annual inflation would have been 3.2%.<\/p>\n
\u201cPetrol prices fell in the September 2026 quarter, compared with the June 2026 quarter,\u201d Stats NZ prices and deflators spokesperson Nicola Growden said.<\/p>\n
\u201cHowever, petrol prices remained higher than in the September 2025 quarter.\u201d<\/p>\n
The cost of constructing new housing also increased, up 3.2%.<\/p>\n
\u201cRespondents reported that higher costs for materials, subcontractors, labour, and fuel contributed to rising prices for new housing,\u201d Growden said.<\/p>\n
Other contributors to annual inflation included electricity (up 9.3%), council rates (up 6.2%) and international airfares (up 12.5%).<\/p>\n
Local authority rates and payments are measured once a year in the September quarter and have been one of the main drivers of annual inflation in recent years.<\/p>\n
\u201cThe 6.2% annual increase in rates in the September 2026 quarter follows an 8.8% annual increase in the September 2025 quarter,\u201d Growden said.<\/p>\n
Olive oil and butter, vegetables, and audio-visual equipment all fell in price over the year.<\/p>\n
More than 85% of the CPI basket increased in price in the 12 months to the September 2026 quarter. In contrast, about 13% of the basket fell in price \u2013 the lowest proportion since the December 2023 quarter.<\/p>\n
Inflation result largely expected<\/p>\n
Bank economists had forecast between 3.7% and 4%.<\/p>\n
In a note published earlier this week, ASB senior economist Mark Smith said the September quarter data being released today was already old news.<\/p>\n
“Q3, however, is in the rear vision mirror,\u201d he said.<\/p>\n
\u201cSharp Q4 increases in vehicle fuels and airfares, rising construction costs and the low NZD impact are expected to push annual CPI inflation to 4.5% by Q4.”<\/p>\n
<\/p>\n
The ASB bank ATM in Botany Town Centre, Auckland (file image). (Source: istock.com)<\/p>\n
Smith said the bigger worry was that fuel costs would become entrenched.<\/p>\n
“We are concerned that inflation over 2027 could prove slow to recede despite favourable base effects,” he said.<\/p>\n
“The uplift in New Zealand fuel prices is looking increasing persistent with much greater risk that this follows through into wider wage and price setting.”<\/p>\n
More rate hikes on the table<\/p>\n
Higher inflation forecasts are likely to mean more pain for loan holders.<\/p>\n
The Reserve Bank uses the official cash rate to keep inflation within its 1-3% target band. <\/p>\n
When prices rise too fast, it lifts the OCR, which pushes up what banks pay to borrow money. Banks pass that on through higher mortgage and loan rates.<\/p>\n
Markets have priced in a high chance the Reserve Bank will lift the OCR by 25 basis points to 3% next Wednesday. <\/p>\n
Smith said ASB’s 2027 forecasts were under review, and the risk was that rates would need to climb higher if inflation stayed stubborn.<\/p>\n
\u201cHigher for longer inflation is a major headache for the Reserve Bank as it risks pressuring inflation expectations and other nominal anchors higher,\u201d he said.<\/p>\n
“We currently expect 25 basis point hikes in October and December and a 3.25% OCR peak. However, risks to the OCR over 2027 are skewed to the upside.”<\/p>\n","protected":false},"excerpt":{"rendered":"Annual inflation has dipped to 3.7% in the September quarter, Stats NZ has announced this morning. The Stats…\n","protected":false},"author":2,"featured_media":637688,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[138,219,111,139,69,244],"class_list":["post-637687","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/637687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=637687"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/637687\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/637688"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=637687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=637687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=637687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}