New Zealand’s inflation climbed above the Reserve Bank of New Zealand's 1–3% target range in the fourth quarter, as the recovering economy keeps upward pressure on prices and raises the prospect of higher interest rates later this year.
Statistics New Zealand reported in Wellington that the consumer price index rose 3.1% year-on-year, up from 3% in the third quarter, slightly exceeding economists’ forecasts of 3%.
On a quarterly basis, prices increased 0.6%, above the expected 0.5%.
While the RBNZ expects inflation to ease toward 2% in 2026, the latest figures suggest the easing phase has likely ended, fueling speculation that interest rates could rise by the end of the year.
Investors anticipate a possible rate hike as early as September, though most economists predict the official cash rate will remain steady until 2027.
The RBNZ cut its official cash rate to 2.25% in November and indicated that its easing cycle was likely complete, citing economic slack that could absorb future price pressures.
Governor Anna Breman, in December 2025, downplayed market bets on an imminent rate hike, even as some banks raised mortgage interest rates.