Brief respite: Inflation rate falls but not for long

The annual inflation rate dropped in the third quarter, although economists fear the respite will be temporary.

New Zealand’s consumers price index (CPI) increased 3.7% in the 12 months to the September 2026 quarter, according to figures released by Stats NZ today.

The 3.7% increase follows a 4.1% increase in the 12 months to the June 2026 quarter. The Reserve Bank of New Zealand’s target band for the annual inflation rate is 1 to 3%.

Petrol was the largest upward contributor to the annual inflation rate, up 19.1%.

“Petrol prices fell in the September 2026 quarter, compared with the June 2026 quarter,” prices and deflators spokesperson Nicola Growden said.

“However, petrol prices remained higher than in the September 2025 quarter.”

If petrol prices had not changed, the CPI would have risen 3.2% in the 12 months to the September 2026 quarter.

The cost of constructing new housing also increased, up 3.2% (7.9% contribution to the annual inflation rate).

“Respondents reported that higher costs for materials, subcontractors, labour, and fuel contributed to rising prices for new housing,” Growden said.

Other contributors to the annual CPI increase were:

• electricity – up 9.3%
• international airfares – up 12.5%
• local authority rates and payments – up 6.2%

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.