Annual inflation, as measured by Statistics NZ's consumers price index (CPI), remained at 3.1% in the March quarter for the second consecutive quarter, continuing to be a touch above the Reserve Bank’s (RBNZ) 1% to 3% target range.
Electricity – up 12.5% – was the largest contributor to the annual inflation rate. Statistics NZ prices and deflators spokesperson Nicola Growden said this was the third quarter in a row electricity was in this position.
“Higher electricity prices accounted for more than a tenth of the 3.1% annual increase,” Growden said.
Other drivers to the annual CPI increase were local authority rates and payments, up 8.8% with a 8.7% contribution to inflation.
This was followed by meat and poultry which was up 8.6% and contributed 6.4% to inflation, followed by rents which rose 1.2%, and contributed 4.6% towards the March quarter’s CPI.
The 1.2% increase in rent was the smallest annual rent increase in 16 years, according to Statistics NZ.
Petrol prices, a hot topic since the US-Israeli attacks on Iran began, showed an annual increase of 1.1%, contributing 1.3% to the CPI.
The March quarter’s annual figure is on the higher side of economists’ projections. In the lead up to Tuesday’s announcement, economists were forecasting inflation of between 2.8% to 3.1% - with Kiwibank economists hitting the nail on the head.
Meanwhile, the Reserve Bank, after holding the Official Cash Rate (OCR) at 2.25% in April, updated its inflation forecast - projecting 3.0% for the March quarter (previously the RBNZ had projected 2.8%). The latest CPI figure is slightly above the Reserve Bank’s inflation range, as it aims for inflation to fall between 1% to 3%, and has a midpoint target of 2%.
Health insurance saw a 20.5% annual jump, while jewellery and watches increased 26.2%.
Audio-visual equipment, real estate services, oils and fats fell in price in the year ending March 2026.
Higher petrol prices the largest contributor to quarterly increase
The CPI increased 0.9% for the March quarter, compared with the December quarter which had a 0.6% rise.
Higher petrol prices were the largest contributor to the quarterly inflation rate, up 3.5%.
Petrol prices fell in January and February but increased in March. It accounts for about 3.5% of household spending.
“Petrol is the third-largest expense item for New Zealand households after rent and construction," Growden said.
Alongside this, prices for pharmaceutical products jumped 17.7% in the March quarter. This was due to an increase in prescription charges.
Petrol and pharmaceutical products accounted for more than a quarter of the 0.9% quarterly increase.
Confectionary, nuts, snacks, fruit and electricity also drove up the quarterly CPI increase. Boxed chocolates played a role in this.
Lower prices were recorded for international air transport, which decreased 7.0%.
Growden said airfares to Europe, Australia and the Pacific Islands drove the fall in international airfare prices in the March quarter.
Overseas accommodation which was prepaid in New Zealand also dropped 4.0%, and milk, cheese and eggs fell 2.0%.
Non-tradeable inflation up 3.5%
The latest CPI figures show annual tradeable (imported) inflation went up 2.5%. Higher prices were recorded for meat and poultry which jumped 11.8%, and cultural services were up 17.8%.
These were partly offset by audio-visual equipment which fell 21.2%, and computing equipment which was down 8.6%.
Non-tradeable annual inflation (goods and services that don’t face overseas competition but can be influenced by foreign competition) increased 3.5% with higher prices recorded for electricity, which was up 12.5%, and local authority rates and payments jumping up 8.8%.
Lower prices were recorded for real estate services, which dropped 4.8%, and milk, cheese and eggs decreased 4.3%.
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22 Comments
With this inflation rate and about to explode much higher, RBNZ gets a FAIL score. IMHO Due to RBNZs deliberate, politically motivated, inaction.
The shiny new, RBNZ Heads "laser focus" on inflation containment???
- She also gets an F. All talk and no action.
A chimp would do an equal or better job and only require bananas.
I find myself in the unusual position of agreeing with you Gecko. The RBNZ should be signalling atleast 3 hikes to the OCR, beginning in May. At the very least, it will help prop up our falling dollar, which is compounding our imported inflation problem.
Would 3 hikes really have any meaningful impact on inflation? In my opinion - 'No'.
At the same time, it will most certainly solidify, and deepen, a nasty recession.
It should be remembered that financial stability is part of the RBNZ's remit. A bad recession, unemployment rising to 8% plus, etc etc won't be great for financial stability....
Many posters here seem to be salivating at the prospect of a really bad recession.
The main remit or mandate is inflation.
Agree financial stability is a secondary consideration, NZ 2.25% OCR is way to low our currency is collapsing. We cannot have that.
yes, it is their *main* remit, but not their only one.
There is no remit that says 'you must hike the OCR if the CPI is too high'. Especially if the inflation is predominantly supply-driven, and hiking the OCR will have little if any impact on inflation.
that's just madness.
As the mighty JFoe says, it's all just so crude and 'medieval'.
For mine, it's a case of 'The Cure being Worse than the Disease'
There are so many factors at play that it has difficult to know for certain where the OCR should be. However, at 2.25%, the OCR is in stimulatory mode and should now return to around 3% which is what I (and the RB Governor) deem to be neutral. If you look at most other OECD nations, their OCR is much higher than ours. We are not immune to the effects of the Iran crisis so it's prudent that we hike rates soon.
The starting point of our economy is weaker than many, though, and therefore probably less likely to withstand the economic impacts of OCR hikes.
Hey, every decision has just as many cons and pros right now. It's a wicked problem.
But keep in mind, if the OCR goes to 3%, there's every chance we will enter a deep and potentially prolonged recession, unemployment will rise significantly, and there will be significant fiscal impacts.
But she gets an A+ from her masters.
I wonder which grading she cares more about...
But she gets an A+ from her masters.
I wonder which grading she cares more about..
It's 2026. Everyone gets an A+ now.
I've always had a certain respect for Alan Greenspan after he admitted he was wrong. He said to Congress that he had found “a flaw” in his model of how the world works and that he was in a state of “shocked disbelief” that self-interest of banks had not protected shareholders and institutions. He acknowledged that he had “made a mistake” in assuming that banks would rigorously manage their own risks.
Yes
We have just proven to ourselves, on vivid display, Banks are risky as hell.
When allowed to advance massive loans, at and well past DTIs of 6 or 7x, they rolled them out like confetti, throughout NZ. The partying was intense.
They just care about short term commissions and bonuses. Not concerned about future likelihood of risks. Not their problem.......Govt will pickup the tab or fallout when the inevitable SHTF.
FYI, The Muck is at blade distribution time, about now.
The Nats are done for.....
Was the Maestro’s admission really a genuine moment of realisation?
Or could it be a strategic retreat during a global meltdown of the system he helped build?
He was getting warnings in the early 2000s about the predatory nature of subprime mortgages. He even expressed unease about irrational exuberance in 96, and housing market froth in 2005.
So we must be sceptical of the theatre surrounding the timing of his admission..
Was the Maestro’s admission really a genuine moment of realisation?
Well it's usually a case where someone else is blamed or unforeseen circumstances (Black Swan stuff).
Greenspan was as close to a master of the universe as you will find. Few people had the courage to challenge him.
So I think he did have some humility.
Became a gold bug further along the path.
John Coleman's books can provide the other side of the coin on Greenspan.
He sees Greenspan as the executive of a long-term plan to manipulate the US economy to manage controlled depressions and facilitate toward a One World Government.
With food inflation I'm not sure you could afford the bananas as promised payment...😉
Once again it is not demand driven, and we're starting in a shitter position than 2022...did the RBNZ really force inflation down or did we ride the global roller coaster...
If OCR can cut council rates and power bills, then hike away.
It is as simple as this, CPI up, OCR up, Mortgage rates up.
- It all equals, all DDDebt funded assets, to fall in both nominal and much more, so in REAL value.
No howlings of this or that, or but, but, but, will alter this current scenario, that will play out over the next two to three years.
Filled the vehicle this afternoon and interested that they've stopped the 'gas up and wander in to pay' system, now it's go in and pay first. Staff member told me drive offs had exploded in number. Being a silver fox with exceptionally good looks and great charm she allowed me to fill up and then come back to pay.
More likely she thought grandad might get confused by the prepay system
That is excellent !!
if you have to go in and pay, you are probably paying to much.....
You’ve still got it you old fox
So Electricity, Rates and Petrol have all increased significantly.
3 basic essentials people cannot avoid.
The CPI is made up of essentials and non essentials so does it really give a fair indication of the burden on households.
And in the current labour market very few people are getting meaningful wage increases.
There is very little discretionary income left in NZ'ers pockets.
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