Consumer prices rose 0.9% during the first three months of 2025, lifting the annual headline inflation rate to 2.5% as petrol and tertiary education prices rose.
Stats NZ’s Consumers Price Index (CPI) for the March quarter showed inflation was still in the Reserve Bank’s 1% to 3% target range but up 0.3 percentage points up from 2.2% in December 2024.
The largest contributor to the annual rate was rental costs which rose 3.7% and contributed 14% of overall inflation. However, rents are rising more slowly than in recent years.
Nicola Growden, a prices spokesperson for Stats NZ, said it was the first time annual rent had increased by less than 4% since 2021.
“Rent is one of the largest weighted items in the CPI basket, so the increase still had a large overall impact on the overall movement”.
The annual inflation rate also included the 12.2% increase in council rates in September and a 1.9% increase in construction prices. These were partly offset by lower petrol prices during the year as oil prices fell and the Auckland fuel tax was lifted.
Growden said large price increases were becoming less common in the inflation data, with less than a quarter of prices increasing by more than 5%. That was the lowest proportion in the past five years, although still higher than pre-Covid levels.
While petrol prices fell in the 12-month period, they moved higher during March and were responsible for 17% of the quarterly inflation rate of 0.9%. Tertiary education was the next largest driver, with prices up 22.6%, contributing 11% of the increase.
Growden said this was the result of the Government policy to make the final year of university free instead of the first year. A large number of students in the system had already claimed their first year free and were therefore ineligible to claim the final year.
This means more students are paying the full cost of studying this year than in the prior year, which shows up as an increase in the consumers price data. This effect will fade as new students get their final year free.
Stats NZ calculates both a tradeable and non-tradable inflation rate, to measure how imported and domestic price changes were influencing the headline rate.
Prices exposed to international competition rose 0.8% during the March quarter, while purely domestic driven prices were up 1.1%. This took the annual rates to 0.3% for tradables and 4% for non-tradables.
While domestic inflation remains sticky, those prices are trending downwards. Tradable inflation, on the other hand, turned negative in September last year but has been rising.
Annual tradable inflation was pushed up by dairy products which rose 8.7% and meat which was up 6.9%. Non-tradable inflation was due to rising rents and council rates.
New Zealand’s headline inflation rate at 2.5% is similar to Australia at 2.4%, the United Kingdom at 2.8%, and the United States at 2.4%. However, economists worry US President Donald Trump’s trade war could reignite inflation in America and elsewhere.
Stats NZ’s measures of core inflation ranged between 2.5% and 2.3% annually, and 1.1% and 0.8% on a quarterly basis. The RBNZ will publish its own measure this afternoon.
DVDs out, Netflix in
The consumers price index basket was reweighted ahead of this data release, after a delayed review was completed in April. Stats NZ regularly updates the goods and services in the basket to reflect New Zealanders spending patterns.
Items such as delivered meal kits, holiday cruises, smart watches, and a wider range of plant-based milks were added to the basket in this review.
DVD purchases have been removed and replaced with subscription to streaming services, which was previously included in a broader pay-TV category.
“We look for sustained changes in spending over time to decide when something has become popular enough to include in the CPI basket,” Growden said.
“Spending on DVDs has decreased as other ways of consuming entertainment, like streaming services, have become more popular”.
An analytical paper explaining the changes will be released in the coming weeks.
17 Comments
4, 3.3, 2.2, 2.2, Orr makes his exit after two good inflation prints, 2.5...
😂😂
Orr takes his big contract cash out and runs for the hills.
Womp womp.
The resurgence of inflation has begun. There follows
the OCR rate rises, later 2025/2026!
Watch all the compromised Oneroof Tools explain it all away and remind all to get into the Dying Property Ponzi now and beee quick.
- We need our FIRE industry commissions/fees and advertising revenues......get onto it FHBs. We need your 30 to 40 years of indebtedness to get rich.
Its quaint that in a world with much bigger news and concerns we get to try and relate things back to the property Ponzi story arc.
It's rich that those exposed to the ponzi only profit when fresh meat/new buyers cash them out.
Yes, but if China invades Taiwan what will that do to property prices in Palmerston North?
MrsPalmerston Nth will plummet in value. Is it not obvious? Who would choose that bedraggled place to live?
Anyway, no Taiwanese can buy homes in NZ.
It’s one thing to hate on the ponzi but it’s a low blow to rip shit on P-Naughty for no reason 😂
OCR rises…watch them cut hard NZG 🪓
Currently yes to OCR cuts, and so say and cheers on, all the very financially compromised and FIRE/FHB reliant banking economist scrotes.
How often has the RBNZ GOT CALLS WRONG.
- MOST OF THE TIME.
SO the cut, as inflation resurges.....good move RBNZ. Yet Another F-up in the works.
Then a bigger, reactive, hiking cycle rockets rates....
“Spending on DVDs has decreased as other ways of consuming entertainment, like streaming services, have become more popular”.
Indicates that these people are unserious and don't want to talk about what inflation really is.
It's 2025 and the stats Ministry is still measuring DVD hires and purchases. The concept of subscription TV and movies has taken a while to sink in it seems.
The largest contributor to the annual rate was rental costs which rose 3.7%
'
I thought rents were flat:
Yep, I had exactly the same reaction when I read this.
Non tradable inflation at 4% p.a.
Need to get control on this domestically generated inflation.
Action:
- Raise OCR.
- Cap Local Authority Rate increases to CPI. (why are we allowing councils to levy double digit increases, when rates are not discretionary)
- Create competition in the electricity sector.
Unfortunately, Luxon is asleep at the wheel (and delusional about progress), remind me why we voted for National.
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