Inflation has edged to a 12 month high on the back of more expensive rents, rates, electricity and food, but remains in the Reserve Bank's target band and is unlikely to prevent further rate cuts.
Stats NZ said the consumer price index rose 0.5 percent in the three months ended June, pushing the annual rise to 2.7 percent from 2.5 percent, the highest since June last year.
"Although the annual inflation rate has increased from the March 2025 quarter, it remains within the Reserve Bank's... Target band of 1 to 3 percent - the fourth consecutive quarter it has done so," senior manager of prices Nicola Growden said.
Rates, rents, power
Domestic prices - non-tradables - remained the backbone of inflation, rising 0.7 percent for the quarter and by 3.7 percent for the year, the slowest increase in four years.
Rates remained the single biggest driver, up 12.2 percent, still reflecting last year's increases.
Rents rose 3.2 percent over the past year, but were increasing at the slowest rate in four years, while electricity prices were up 8.4 percent reflecting recent increases in lines charges.
The costs of purchasing a new house fell for the first time 14 years in the June quarter, because of competitive pricing and cheaper fit out costs, although were 0.8 percent higher for the year.
By comparison, the price of imported goods and services - tradables - rose 0.3 percent for the quarter and by 1.2 percent for the year, reflecting the high prices being gained for export food such as dairy, as well as more expensive overseas accommodation.
A notable feature of the quarter was a surge in the cost of streaming services.
The main offsets were cheaper petrol and telecommunications equipment.
The inflation numbers were a shade below economists' expectations, although they have continued to forecast the annual rate going above the Reserve Bank's (RBNZ) 1-3 percent target band.
Expectations are for the RBNZ to deliver a further cut to the official cash rate next month to 3-percent, with further cuts dependent on the state of the local economy and the broader global trade and growth outlook.
New Zealand's inflation rate was higher than Australia and the European Union, matched that in the US, but was below the UK And the OECD's average of 4 percent.
Finance Minister Nicola Willis said the data showed inflation remained under control and it was the fourth consecutive quarter inflation had remained within the Reserve Bank's target range.
"New Zealanders can be assured it now has a government that is paying attention to forces that affect their cost of living," she said.
"It's pleasing to see non-tradeables inflation - which paints a picture of domestic demand and supply conditions - continues to fall."
The effect council rates had on inflation was a concern, Willis said.
"That's why this government has also been clear in its call to councils to focus on the basics and keep rates under control. We look forward to councils taking heed of this and playing their role as stewards of ratepayers' money better in the future," she said.
"External pressures on inflation remain, and we must remain cautious - it's a reminder that the economic recovery is not to be taken for granted."
But Labour finance spokesperson Barbara Edmonds said the figures show the cost of living crisis is getting worse under National and people are sick of it.
"Christopher Luxon promised to make the cost of living better, instead, he's making it worse." she said.
"Food prices are surging with butter up nearly 50 percent. Rates are up over 12 percent, electricity is up over 8 percent, and everyday costs continue to rise, yet this government keeps siding with property speculators and fossil fuel companies while families are left behind."
Edmonds said the prime minister was completely out of touch with the needs of middle New Zealand and it was no wonder 47,000 people chose to leave for Australia last year.
Green Party co-leader Chlöe Swarbrick said the inflation numbers show the government is failing by its own standards while vulnerable people pay the price.
"While Christopher Luxon talks about growth at all costs, New Zealanders across the country are being forced to choose between heating their home or feeding their families," Swarbrick said.
"Luxon's Government is cutting investment and creating the conditions for severe unemployment, shredding the social safety net, pushing thousands into poverty, and then punishing them for it."
Swarbrick said a report published by the Child Poverty Action Group showed that rent, food and utilities were taking up between 62 and 98 percent of disposable income for beneficiary families, and over 60 percent for full-time minimum-wage workers.
"Christopher Luxon shows people who he works for in his actions every day. While telling regular people there's 'no magic money tree,' he's found billions for military spending, fossil fuel, tobacco, and landlord tax cuts," she said.
