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Inflation has eased to 3.7 percent, but it remains above the Reserve Bank’s target, with petrol, power and rates the biggest drivers over the year.
Annual inflation dropped from 4.1 percent in the June quarter, figures released by Stats NZ on Thursday showed. The Reserve Bank’s target band is 1 to 3 percent.
Petrol was the biggest driver, up 19.1 percent on a year ago and responsible for 17.5 percent of the annual increase.
“Petrol prices fell in the September 2026 quarter, compared with the June 2026 quarter,” Stats NZ prices and deflators spokesperson Nicola Growden said. “However, petrol prices remained higher than in the September 2025 quarter.”
Without the rise in petrol, annual inflation would have been 3.2 percent.
Electricity was up 9.3 percent over the year, international airfares rose 12.5 percent, and local authority rates and payments climbed 6.2 percent.
Rates are measured once a year and have been one of the main drivers of inflation in recent years.
“The 6.2 percent annual increase in rates in the September 2026 quarter follows an 8.8 percent annual increase in the September 2025 quarter,” Growden said.
The cost of building a new home rose 3.2 percent.
“Respondents reported that higher costs for materials, subcontractors, labour, and fuel contributed to rising prices for new housing,” Growden said.
More than 85 percent of the items in the CPI basket went up in price over the year. Only about 13 percent got cheaper, the lowest share since the December 2023 quarter.
Olive oil and butter, vegetables, and audio visual equipment were among the items that fell in price.
International airfares were the biggest driver of the quarterly rise, jumping 14.3 percent.
“This was the largest quarterly increase in international airfares since the December 2022 quarter. The increase was mainly driven by higher fares to Europe and Asia,” Growden said.
Petrol prices fell 6.5 percent in the quarter, after rising 20.1 percent in the June quarter.
Rates, vegetables and construction costs also pushed prices higher over the three months.
