Annual inflation rose to 3.1% in the December 2025 quarter, edging above the Reserve Bank of New Zealand’s 1–3% target band, according to figures released by Stats NZ.
The increase follows a 3% annual rise in the September 2025 quarter and is the highest annual inflation rate since June 2024, when it was 3.3%.
“While the annual inflation rate has slowed considerably since its most recent peak of 7.3% in the June 2022 quarter, it has increased each quarter since the December 2024 quarter, when it was 2.2%,” Stats NZ prices and deflators spokesperson Nicola Growden says.
Housing and household utilities were again the largest contributors to annual inflation. Over the year to December, electricity prices rose 12.2%, local authority rates and payments increased 8.8%, and rents were up 1.9%.
“Annual electricity increases remain at their highest since the late 1980s, when there were several major reforms in the electricity market,” Growden says.
Transport prices also returned to annual growth, rising 2.6% in the year to the December quarter. That compares with a 3.6% annual decline in December 2024, highlighting a clear turnaround in transport-related costs.
Within the transport group, private transport supplies and services rose 3.6% over the year, passenger transport services increased 2.2%, and vehicle purchase prices were up 1.1%.
Other notable price rises over the year included meat and poultry, up 8.2%, overseas accommodation, up 9.1%, milk, cheese and eggs, up 9.8%, and telecommunication services, up 7.0%. Prices for pharmaceutical products, audio-visual equipment, and games, toys and hobbies fell over the year.
Stats NZ says more than 80% of items in the CPI basket increased in price over the past year, the highest proportion recorded in 18 months, although more than half rose by 3% or less.
Quarterly inflation rose 0.6% in the December quarter, compared with the September quarter.
Higher international airfares were the largest contributor to the quarterly increase, rising 7.2%, driven by stronger demand for travel to Asia, Australia and Africa.
“Prices for international air transport typically increase during the New Zealand summer holidays as demand for overseas travel picks up,” Growden says.
Petrol prices also rose over the quarter, up 2.5%. The average price of 91-octane fuel increased to $2.61 a litre, from $2.54 in the September quarter.
Lower vegetable prices, down 16.5%, helped offset some of the quarterly rise, reflecting seasonal falls in items such as tomatoes, cucumbers, capsicums, lettuce and broccoli.
