Annual inflation 3.1% in March quarter, with electricity leading the way. Rent rise lowest in 16 years, petrol price rises show up for March quarterly rate

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%.