By Mike Bain. – The Daily Examiner.

In a significant development for New Zealand’s economy, the consumers price index (CPI) increased by 2.5 percent in the 12 months leading to the March 2025 quarter, as reported by Stats NZ today.

This marks the third consecutive quarter where the annual inflation rate has remained within the Reserve Bank of New Zealand’s target band of 1 to 3 percent.

The latest figures follow a 2.2 percent annual increase recorded in the December 2024 quarter. Nicola Growden, Stats NZ’s prices and deflators spokesperson, highlighted the importance of this trend, stating, “The annual inflation rate is within the Reserve Bank of New Zealand’s target band of 1 to 3 percent for the third consecutive quarter.”

This stability comes after a prolonged period of elevated inflation, with rates exceeding the target band between the June 2021 and June 2024 quarters.

Key contributors to the annual inflation rate include a 3.7 percent rise in rent prices, which accounted for 14 percent of the overall increase.

Notably, this is the first time since 2021 that annual rent increases have fallen below 4 percent.

Other significant factors include a 12.2 percent rise in local authority rates and payments, and a 1.9 percent increase in construction prices. On the other hand, lower petrol prices provided some relief, with a 2.8 percent decrease over the same period.

While the Reserve Bank’s monetary policy appears to be achieving its intended effect of stabilizing inflation, the broader economic landscape remains complex.

The recent reduction in the official cash rate to 3.75 percent reflects ongoing efforts to support economic growth amidst global uncertainties.

As New Zealand navigates this period of economic adjustment, the focus will likely remain on maintaining inflation within the target band while addressing other pressing economic challenges.

The steady inflation rate is a positive sign, but questions about long-term sustainability and the impact on households and businesses persist.