Inflation Hits 2.7% Annual High, Council Rates Drive Costs
Government maintains inflation is “under control” despite increase
Inflation has climbed to a 12-month peak of 2.7%, according to the latest official figures released by Stats NZ. This rise from the 2.5% recorded in the previous quarter marks the fourth consecutive period inflation has remained within the Reserve Bank of New Zealand’s target band of 1-3%.
Local Authority Rates a Major Contributor
The significant increase in inflation was primarily driven by local authority rates and payments, which surged by 12.2% over the year. These rates accounted for 13% of the overall 2.7% annual inflation increase. Stats NZ spokesperson Nicola Growden noted that these rate changes are typically captured annually in the September quarter, with the latest figures reflecting increases as of July 2024.
Conversely, petrol prices provided a “significant downward contribution” to the inflation rate, decreasing by 8%. The average price for a litre of 91 octane fuel dropped to $2.54 in the June 2025 quarter from $2.76 in the same period last year. Excluding petrol, the Consumers Price Index (CPI) rose by 3.2% over the 12 months to June 2025.
Rent prices also saw an increase, rising 3.2% annually. However, this represents the smallest yearly rent increase in four years, a notable change from the 2.9% rise seen in the 12 months to June 2021. Rent increases contributed 13% to the overall inflation figure.
Minister Defends Government’s Economic Stance
Finance Minister Nicola Willis asserted that inflation remains “under control” and within the Reserve Bank’s target range. She contrasted the current situation with the previous government’s tenure, highlighting that inflation had previously reached a high of 7.3% in 2022.
“It’s the fourth consecutive quarter inflation has remained within the target range – a stark contrast to under the previous government, where inflation raged on unchecked, reaching 7.3% in 2022.”
—Nicola Willis, Finance Minister
While pleased with the continued fall in non-tradables inflation, Willis expressed concern over the impact of council rates. She reiterated the government’s call for councils to manage spending effectively and control rates. The minister also cautioned that external pressures persist, reminding the nation that economic recovery should not be taken for granted.
Opposition Criticises Government’s Handling of Costs
Opposition parties have accused the government of making excuses and failing to meet its own objectives. Labour’s finance spokesperson Barbara Edmonds stated that the latest figures indicate the cost of living crisis is worsening under the current administration.
Edmonds claimed Prime Minister Christopher Luxon had promised to improve the cost of living but was instead making it more difficult for families. She pointed to rising costs for food, rates, and electricity, accusing the government of favouring property speculators and fossil fuel companies.
Green Party co-leader Chlöe Swarbrick echoed these sentiments, labelling the inflation numbers as evidence of a government “failing by its own standards while our most vulnerable pay the price.” She argued that government policies were exacerbating poverty and unemployment.
Recent data from the World Bank indicates that global inflation remained a concern throughout 2023, averaging 6.9% for developing economies and 3.8% for advanced economies. This global context suggests that domestic inflation rates, even those within target bands, continue to face external pressures (World Bank, 2025).
