Our take on the latest Consumers price index (Tue 21 Apr 2026)
Annual inflation
Non-tradables inflation
Items increasing
3.1%pa3.5%pa
68%Unchanged in March
Unchanged since Sep 2025
By expenditure weight
The key numbers...
- The annual inflation rate remained at 3.1%pa in the March 2026 quarter, despite expectations of a slowdown in inflation – today’s headline figure was above the market average pick of 2.9%pa and our own pick of 3.0%pa.
- The largest contributors to higher inflation were broadly as expected – electricity and gas prices continue to rise, now up 12.5%pa and 13.2%pa, alongside local government rates, up 8.8%pa, followed by meat and poultry prices rising 8.6%pa.
- Higher fuel prices in March, due to the Iran War, aren’t immediately obvious in the quarterly figures, with petrol prices up 1.1%pa and diesel and other fuels up 8.3%pa over the quarter.
- There were a notable number of increases in other items, including a 1.5%pa lift in new car prices, the largest annual increase since the end of the Clean Car Discount in late 2023, building cost inflation of 1.0%pa, and rental inflation of 1.2%pa – the slowest annual rent increase since the end of 2009.
- In the March quarter, nearly 68% of the CPI basket by expenditure weight experienced an increase in price, above the long-term average of 65%.
...and our reaction
- The starting point for inflation heading into the higher cost environment, caused by the Iran War, was hotter than expected. This stronger starting point reveals real headaches for the Reserve Bank going forward.
- The March 2026 quarter inflation figures only capture the early effects of the Iran War on prices, and we expect inflation to jump to perhaps 4.8%pa in the current June quarter. The current quarter will include higher fuel prices throughout, alongside the initial pass-through of higher fuel and transport costs into the supply chain.
- The persistence of inflation above the 3%pa top of the Reserve Bank’s target range signals a level of underlying inflationary pressure and a lack of pricing discipline. These factors had kept inflation higher than comfortable, despite clear weakness across the labour market and broader economy, even before the price shock caused by the Iran War had emerged.
- We continue to be surprised by the extent of price increases in some areas. There are clear reasons for higher prices for fuel, flights, power, and meat, but other areas, like the 5.0%pa lift in property maintenance services, 5.6%pa lift in household textiles, and 8.9%pa lift in household appliance repair costs, appear at odds with a weaker economy that should restrict businesses’ ability to raise prices.
- We have higher starting inflation, what appears to be more willingness from businesses to push through price increases than would usually be expected, and clear supply chain disruptions and pricing pressures due to the Iran War. As a result, it is a question of when, not if, the Reserve Bank needs to raise the official cash rate to ward off even further pass-through of price increases than is already likely to occur. At this stage, we continue to expect the first increase to be made in July.
Latest updates
Premium
Consumers price index
More worries about broadening inflation
Thu 22 Oct 2026
Quarterly
3.7%pa Annual inflation slowed back in Sep 2026
3.0%pa Inflation excl fuel accelerated slightly3.2%pa Building costs up in Sep 2026Premium
Consumers price index
Fuel price spike sends annual inflation to 4.1%pa
Tue 21 Jul 2026
Quarterly
4.1%pa Annual inflation rises in June 2026
2.9%pa Inflation excl fuel slowed1.6% Building costs up in June 2026 quarterConsumers price index
Inflation breaches the RBNZ upper band
Fri 23 Jan 2026
Quarterly
Inflation up to 3.1%paNon-tradable inflation unchanged at 3.5%pa
OCR expectations and wholesale interest rates likely to increase