New Zealand Inflation Rate Misses Expectations in Q2

New Zealand’s annual inflation rate edged up to 2.7% in the second quarter of 2025, from 2.5% in the previous quarter, but remained just below market expectations of 2.8%. Key drivers of the annual increase included local authority rates and payments, which rose 3.2% and contributed 12.9% to the overall rise. Rents and electricity prices also climbed by 3.2% and 8.4%, contributing 12.5% and 8.4%, respectively. These gains were partially offset by significant declines in petrol and early childhood education costs. Petrol prices dropped 8%, subtracting 12.8% from the index, while early childhood education fell 22.8%, contributing -4.7%. The latter reflects the impact of the FamilyBoost childcare payment introduced on July 1, 2024. On a quarterly basis, the Consumer Price Index rose 0.5% in the June quarter, slowing from a 0.9% increase in Q1 and missing forecasts of a 0.6% rise.