New Zealand’s annual inflation rose to 2.7% in Q2 2025, up from 2.5% in Q1, but slightly below the 2.8% forecast by economists. The increase was driven by higher rents, electricity costs, and local government taxes, according to Statistics New Zealand.
On a quarterly basis, consumer prices rose 0.5%, less than the expected 0.6%. Non-tradables inflation—a key measure of domestic price pressures—slowed to 3.7%, its lowest since Q2 2021, while tradables prices rose 1.2% from a year earlier, led by food and travel costs.
The Reserve Bank of New Zealand (RBNZ), which recently paused its easing cycle and held the cash rate at 3.25%, had projected 2.6% inflation for the quarter. Economists still anticipate further cuts, with weak domestic demand, soft housing and labor markets, and global uncertainty—especially around U.S. tariffs—likely to weigh on inflation.
Despite the uptick, inflation remains within the RBNZ’s 1–3% target band. Analysts say the data doesn’t rule out another rate cut in August, with additional easing expected later in the year if price pressures continue to moderate.