Annual inflation is running at 3.1 per cent in New Zealand, as at March this year, according to statistics released by the government.
New Zealand’s consumers price index (CPI) increased 3.1 percent in the 12 months to the March 2026 quarter.
The Reserve Bank of New Zealand’s target band for the annual rate is 1 to 3 percent, meaning our current rate is creeping over the top end of the target.
The 3.1 percent increase follows a 3.1 percent increase in the 12 months to the December 2025 quarter.
According to Stats NZ, the largest upwards contributor to the annual inflation rate was electricity, which rose 12.5 percent.
“Higher electricity prices accounted for more than a tenth of the 3.1 percent annual increase,” prices and deflators spokesperson Nicola Growden says.
“This was the third quarter in a row that electricity was the largest upwards contributor to the annual inflation rate.”
Notable CPI contributors
Other notable contributors to the annual increase were:
- local authority rates and payments – up 8.8 percent (8.7 percent contribution to the 3.1 percent annual inflation rate)
- meat and poultry – up 8.6 percent (6.4 percent contribution)
- rent – up 1.2 percent (4.6 percent contribution)
- petrol – up 1.1 percent (1.3 percent contribution).
However, Stats NZ also notes that the 1.2 percent increase in rent was the smallest annual increase in 16 years.
Interestingly, audio-visual equipment; real estate services; and oils and fats all fell in price in the year ending March 2026.
The quarterly inflation rate rose at 0.9 percent in the March 2026 quarter, compared with the December 2025 quarter.
Significantly, higher petrol prices were the largest contributor to the quarterly inflation rate, and were up 3.5 percent. Petrol prices fell in January and February, but rose in March. And we can expect to see the impact of the Iran War is having on fuel prices in the following quarter.
March 2026 has more information on monthly fuel price movements. Crowden reports that petrol is the third-largest expense item for New Zealand households, after rent and construction. Petrol accounts for around 3.5 percent of typical household spending, as determined in the 2024 CPI reweight using household spending data.
Prices for pharmaceutical products also increased in the March 2026 quarter – up 17.7 percent, driven by an increase in prescription charges. The prescription count for the prescription subsidy scheme reset on 1 February 2026. That meant that households who had previously exceeded the 20-prescription threshold, and were receiving free prescriptions, now have to pay the prescription co-payment.
Combined, petrol and pharmaceutical products accounted for more than a quarter of the 0.9 percent quarterly CPI increase.
Excluding the effect of petrol, the CPI rose 0.8 percent in the March 2026 quarter.
Other large contributors to the quarterly CPI increase were confectionery, nuts, and snacks; fruit; and electricity.
Lower prices were recorded for international air transport, down 7.0 percent. However, in a more positive indicator, Crowden says that airfares to Europe, Australia, and the Pacific Islands drove the fall in international airfare prices in the March 2026 quarter.
