Annual Inflation At 2.5 Percent In March 2025

Aotearoa New Zealand's consumers price index (CPI) increased 2.5 percent in the 12 months to the March 2025 quarter, according to figures released by Stats NZ today.

The 2.5 percent increase follows a 2.2 percent annual increase to the December 2024 quarter.

"The annual inflation rate is within the Reserve Bank of New Zealand's target band of 1 to 3 percent for the third consecutive quarter," prices and deflators spokesperson Nicola Growden said.

Between the June 2021 and June 2024 quarters, annual inflation was above the target band.

The largest contributor to the annual inflation rate was rent, up 3.7 percent. Rent prices contributed 14 percent of the 2.5 percent annual increase.

"This is the first time annual rent has increased by less than 4 percent since 2021," Growden said.

"Rent is one of the largest weighted items in the CPI basket, so the increase still had a large impact on the overall movement."

Local authority rates and payments increased 12.2 percent in the 12 months to the March 2025 quarter (14 percent contribution to the 2.5 percent increase). Rates are captured once a year in the September quarter, as this is when ratepayers see price changes set by councils.

Construction prices also increased, up 1.9 percent in the 12 months to the March 2025 quarter (7 percent contribution to the 2.5 percent increase).

Lower petrol prices slightly offset the annual CPI increase, with prices down 2.8 percent in the 12 months to the March 2025 quarter. This decrease followed a 9.2 percent decrease in petrol prices in the 12 months to the December 2024 quarter.

The average price for one litre of 91 octane fuel was $2.67 in the March 2025 quarter, down from $2.74 in the March 2024 quarter.

Prices for petrol in Auckland decreased 5.8 percent in the 12 months to the March 2025 quarter, compared with a 1.3 percent decrease for New Zealand excluding Auckland. This coincides with the removal of the Auckland regional fuel tax of 10 cents per litre plus GST on 30 June 2024.

Less than a quarter of the CPI basket increased in price by 5 percent or more in the 12 months to the March 2025 quarter.

"We are seeing the lowest proportion of the CPI basket increase in price by more than 5 percent over the last four years," Growden said.

"However, it is still above the pre-COVID levels seen prior to 2021."

Quarterly inflation at 0.9 percent

The CPI rose 0.9 percent in the March 2025 quarter, compared with the December 2024 quarter.

Petrol prices, up 4.6 percent, were the largest contributor to the quarterly rise (17 percent of the 0.9 percent quarterly rise).

Tertiary and other post-school education prices were up 22.6 percent in the March 2025 quarter (11 percent contribution to the 0.9 percent rise).

Fees Free for the first year of study or training finished at the end of 2024. Final-year Fees Free scheme replaced it, starting 1 January 2025.

"Students who have already claimed first-year Fees Free are ineligible to claim final-year Fees Free, meaning more students are paying the full study cost in 2025," Growden said.

Prices for tertiary and other post-school education fell by 16 percent in the March 2018 quarter when first-year Fees Free was introduced.

Excise duty increase from 1 January 2025

On 1 January 2025, new excise duty rates came in for tobacco products.

Cigarettes and tobacco prices increased 3.9 percent in the March 2025 quarter, compared with the December 2024 quarter.

"The increase in the price for cigarettes and tobacco is lower than we have typically seen in a March quarter," Growden said.

Update to CPI basket

The 2024 CPI review has updated the basket of goods and services in the CPI and the relative weight of each item.

Meal kits, cruises, and smart watches added to CPI basket in latest update has details of the changes.