Inflation rate falls to 3.7% for September year but not for long
New Zealand's annual inflation rate dropped to 3.7% in the September quarter, largely due to lower petrol prices. However, economists warn that rising global oil prices and a weak currency will likely push inflation back up, necessitating continued high interest rates.
Why it matters
The data suggests that the Reserve Bank of New Zealand may need to maintain restrictive monetary policy, impacting borrowing costs for consumers and businesses.
A fall in the topline rate of annual inflation for the third quarter wasn’t enough to reassure local economists, who expect it to lift back above 4% and force the Reserve Bank to keep lifting the Official Cash Rate.
The consumers price index (CPI) increased 3.7% in the 12 months to the September 2026 quarter, according to figures released by Stats NZ.
That followed a 4.1% increase in the 12 months to the June 2026 quarter.
The Reserve Bank of New Zealand (RBNZ) target band for the annual inflation rate is 1 to 3%.
The lower topline number was underpinned by a fall in petrol prices through the third quarter.
Unfortunately, global oil prices started rising again in early September and, in combination with a low Kiwi dollar, have pushed local petrol prices back to record levels.
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