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Dunedin property owners are in for a 5% overall rates increase in the next financial year.
The Dunedin City Council's annual plan for the 2019-20 year will be discussed at a meeting on Tuesday.
The rates increase is in line with predictions, and lower than a more than 7% increase last year.
The annual inflation rate was 1.9% for the December 2018 year, according to Stats NZ.
Annual inflation has ranged between 1.1% and 2.2% since December 2016.
The council last year agreed to a 10-year plan that included significant spending on the likes of the architecturally designed bridge connecting the city and the waterfront, and multimillion-dollar upgrades of the central city and tertiary area.
The costs of that spending are reflected in increasing rates.
Mayor Dave Cull said yesterday the increase was the cost of a growing city.
A report to the meeting noted maintenance costs had increased, reflecting increased contracting costs, and the need to address maintenance of the city's water, wastewater and stormwater network.
General costs had increased, as had personnel costs.
Fees and charges for council services would increase by 3% in most cases, though there were exceptions, including no increase for aquatic services (swimming pools).
Mr Cull said there were steep rises in capital spending from decisions the council had made.
"It's an indication of what you need to do when you have growth."
The cost of running local government was rising at more than the increase in inflation.
"When you've got growth, and you've got to invest in growth, putting new infrastructure in for growth, it adds more on again.
"It's not just business as usual, you're not just renewing what you've already got, you're actually investing more.
"That becomes really challenging."
Local government was still asking the Government to look at other funding mechanisms for councils.
"There has to be alternatives or we're not going to be able to fund growth."
On the hit ratepayers were taking with the rise, Mr Cull said it was projected for the spending needed for investment, and that was the cost.
There was a demand for enhanced services, and that was not possible without more staff and more investment.
The council is planning "community engagement" on the annual plan, with information to be sent to householders, and face-to-face sessions with councillors open to residents.