Inflation increases to 2.7%
The increase in the 12 months to the June quarter followed a 2.5% increase in the 12 months to the March 2025 quarter.
"Although the annual inflation rate increased from the March 2025 quarter, it remains within the Reserve Bank of New Zealand's target band of 1 to 3% – the fourth consecutive quarter it has done so," Stats NZ prices and deflators spokesperson Nicola Growden said.
The largest contributor to annual inflation was local authority rates and payments, up 12.2%.
Growden said rates contributed 13% of the 2.7% annual increase and were captured yearly in the September quarter.
ADVERTISEMENT
"The 12.2% annual increase for rates was captured in the September 2024 quarter. Next quarter we will capture changes in rates as of 1 July 2025."
Petrol prices made a "significant downward contribution" to inflation, she said, with a decrease of 8%.
"The CPI excluding petrol increased 3.2% in the 12 months to June 2025."
The average price for one litre of 91 octane fuel was $2.54 in the June 2025 quarter, down from $2.76 in the June 2024 quarter.
Rent prices also increased, up 3.2% in the 12 months to the June 2025 quarter, and contributing 13% to the 2.7% inflation increase.
"The 3.2% increase in rents is the smallest annual increase in four years. Rents increased 2.9% in the 12 months to June 2021."
Inflation remains 'under control' - Willis
ADVERTISEMENT
Nicola Willis (file). (Source: 1News)
Finance Minister Nicola Willis said inflation "remained under control" and within the Reserve Bank's target range.
"It's the fourth consecutive quarter inflation has remained within the target range – a stark contrast to under the previous government, where inflation raged on unchecked, reaching 7.3% in 2022."
While it was "pleasing" to see non-tradeables inflation continue to fall, she said the effect of council rates on inflation was a "concern".
"That's why this Government has also been clear in its call to councils to focus on the basics and keep rates under control. We look forward to councils taking heed of this and playing their role as stewards of ratepayers' money better in the future."
Willis added that external pressures on inflation remained and that the country "must remain cautious".
"It's a reminder that the economic recovery is not to be taken for granted."
ADVERTISEMENT
'Failing by its own standards': Opposition hits out at Govt over inflation
Barbara Edmonds (Source: 1News)
The Opposition accused Prime Minister Christopher Luxon and the coalition Government of "making excuses" and "failing by its own standards" on the back of the inflation increase.
Labour's finance spokesperson Barbara Edmonds said the figures released today showed the cost of living crisis was "getting worse under National".
"Christopher Luxon promised to make the cost of living better, instead, he's making it worse, He has been making excuses for 18 months now. People are sick of it."
She accused Luxon of being "completely out of touch" with the needs of middle New Zealand.
ADVERTISEMENT
"Food prices are surging with butter up nearly 50%. Rates are up over 12%, electricity is up over 8%, and everyday costs continue to rise, yet this Government keeps siding with property speculators and fossil fuel companies while families are left behind."
Green Party co-leader Chlöe Swarbrick. (Source: 1News)
Green Party co-leader Chlöe Swarbrick said the inflation numbers exposed a "government failing by its own standards while our most vulnerable pay the price".
"Luxon's Government is cutting investment and creating the conditions for severe unemployment, shredding the social safety net, pushing thousands into poverty, and then punishing them for it."
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Scoop
28 minutes ago
- Scoop
Dunne's Weekly: A Tale Of Two Ferries
In March this year, Straits Shipping, operators of the Bluebridge Cook Strait ferries, announced the purchase of a new ferry. The nearly 28,000 tonne Livia, built in 2008, was bought to replace the 28 year-old Strait Feronia, in service with Bluebridge since 2015. The Livia arrived in Wellington earlier this month and began service on the Cook Strait run this week. No terminal renovations have been required in either Picton or Wellington to accommodate the Livia, which will carry around 375 passengers and 200 cars. Morgan Stanley Infrastructure, owners of Straits Shipping since 2022, have not disclosed the Livia's purchase price nor how long the purchase negotiations took. In sharp contrast to Bluebridge's apparent time-frame for replacing the Strait Feronia, back in 2018 the then Labour/New Zealand First coalition government launched the IREX project to replace the publicly owned Interislander line's three aging ferries. Three years later, in June 2021, Kiwirail, the operator of the Interislander ferries, signed a contract with Korea's Hyundai Mipo shipyards to build two new rail enabled ferries. They were projected to enter service in 2026. The cost of the project was estimated to be $1.45 billion. But just over two years later, by the time the current National/Act/New Zealand First coalition had taken office, the project's cost had more than doubled to $3.1 billion. There were estimates the cost could even climb as high as $4 billion by the time the ships were delivered. However, the massive explosion in costs was not related to the ships - their cost remained relatively static - but in the costs of upgrading shoreside facilities on both sides of Cook Strait to accommodate the new ferries. It was therefore no real surprise that the new government cancelled the project and went back to the drawing board, looking for a "Toyota Corolla rather than a Rolls Royce solution" as Finance Minister Nicola Willis said at the time. Earlier this year, the government announced a revised programme for building two new rail-enabled ferries to be in service by 2029, with substantially pared back shoreside facilities. As part of the plan, the trouble-plagued 26 year-old Aratere will be withdrawn in a few weeks. Its withdrawal will mean there will be no rail-enabled ferries on Cook Strait, until the new ships arrive in 2029. By that time, the Interislander's two remaining ferries, Kaiārahi and Kaitaki, will be 31 and 34 years old respectively. They will be long overdue for replacement - only the Tamāhine has served longer on the Cook Strait route, from 1925 to 1962. And, in sharp to contrast to Bluebridge, Interislander's ferry replacement programme will have taken just over eleven years, assuming no further delays. Also by 2029, Bluebridge's other ferry, the 500 passenger, 200 car, Connemara, will be coming up for replacement. But even then it will still be younger than Interislander's ferries are today. Bluebridge and the Interislander have an almost equal share of the Cook Strait passenger and vehicle traffic. Together, they are a vital transport link between the North and South Islands. It is in the interests of both the travelling public and the freight and transport industries that they provide a safe and reliable service across Cook Strait. Yet both have had their share of incidents with their ships in recent years, raising concerns about the age and resilience of the ferries. Given this concern, and the lengthy nature of Interislander's current ferry replacement programme, there must inevitably be questions about the durability of the Cook Strait service until the new ferries arrive in 2029. While Bluebridge has future-proofed its operation, at least for the medium-term, by the acquisition of the Livia at the mid-point of its life, the same cannot confidently be said for the Interislander. Kaitaki and Kaiarahi are already old ships, with the prospect of at least four to five years more service, without major incident, ahead of them. That is a bold assumption. Whereas Interislander's keenness to buy new ferries for the first time since the building of Aratere in 1999 is understandable, it stands in sharp contrast to Bluebridge's strategy of purchasing mid-life ships and turning them over every decade or so. With the cost blow-outs associated with the original IREX project and the delays associated with the refocusing of the ferry replacement programme, taxpayers might be forgiven for wondering whether the more short-term approach of Bluebridge has greater merit. Livia's first Cook Strait crossing this week, just a couple of weeks after arriving in New Zealand, and just over four months after its purchase, will add fuel to that question.
Otago Daily Times
an hour ago
- Otago Daily Times
Nicola Willis: NZers not getting a 'raw deal' on butter
By Giles Dexter of RNZ The Finance Minister does not believe New Zealanders are getting a "raw deal" on butter, but has accepted there is no getting away from how expensive it is right now. Nicola Willis met Fonterra's chief executive Miles Hurrell at Parliament on Tuesday evening. While the two meet regularly, there was increased interest in the meeting due to the current price of butter. Willis had earlier said it was something she would discuss with Hurrell. Characterising the meeting as "constructive and engaging," Willis said Hurrell was candid about the way butter was priced in New Zealand. Her summarisation of her meeting with Fonterra largely zeroed in on her drive to increase supermarket competition. The large proportion of what people pay for butter is dictated by global demand, which is something the government could not control. "Were that price to come down, you would expect that to be reflected in the prices that New Zealand shoppers pay," Willis said. Hurrell had told her that butter had once been the hardest product for Fonterra to sell globally, but the increasing demand was due to reporting on its health benefits. "It was once viewed as a bogeyman," she said. The meeting had reinforced Willis' interest in increasing supermarket competition to put downward pressure on the price of butter. "All roads lead back to supermarket competition. I continue to believe that is the most powerful lever that the government has on this issue. We will never be able to control global dairy prices. What we can influence is the amount of competition in New Zealand's grocery sector and we have a lot of work under way to address that." Fonterra had also observed the supermarket competition. "Miles specifically conveyed that Fonterra operates in a number of markets around the world, most of which have a more competitive supermarket sector, and that it does feel different in New Zealand." She would leave it to supermarkets and Fonterra to argue who was charging what margin. "The sense that I got from my engagement with Miles is that it's a constant battle between them. Each party are probably going to point fingers at the other." Hurrell would not answer questions when RNZ approached him outside Parliament on Tuesday night, but a Fonterra spokesperson said the meeting was "constructive". Willis said she had encouraged Hurrell to front, in particular to explain what proportion of the margins go to Fonterra and what goes to supermarkets. Acknowledging that Fonterra's job was to get the best possible price for its shareholders, Willis also accepted New Zealanders saw the downsides of that when they were shopping. "I've been satisfied that I don't think consumers are getting a raw deal. I think that there is good work going on to ensure that there is pressure and competition from Fonterra to try and keep its prices low. But I get it. Butter is expensive right now. There's no getting away from that."
The Spinoff
3 hours ago
- The Spinoff
What did Nicola Willis's cost-of-butter meeting with Fonterra actually achieve?
The butter price crisis prompted a high-profile meeting at the Beehive – but global markets, not politicians, are still calling the shots, writes Catherine McGregor in today's extract from The Bulletin. Was the butter meeting a damp squib? Finance minister Nicola Willis says she was surprised by 'the almost breathless excitement' around her Tuesday evening meeting with Fonterra chief executive Miles Hurrell, reflecting a week of coverage perhaps more suited to a major sporting event than a wonky meeting about dairy economics. The Post dubbed it 'the butter meeting heard round the country' while news sites ran red breaking news banners as Hurrell and Willis sat down to talk. With 500g blocks of butter topping $11 in some supermarkets, the stakes, at least symbolically, were high. Willis said the conversation covered many topics, but she did ask Hurrell to clarify how butter is priced and why New Zealanders often pay more than overseas consumers. The main outcome, according to the Herald's Thomas Coughlan? A suggestion that Hurrell will publicly explain the breakdown of butter pricing later this week. 'He was so good at communicating about [butter prices], I have encouraged him to provide that information to New Zealanders,' Willis said. Labour smells spin The political optics of the meeting have raised eyebrows, particularly given Willis's own six-year stint in senior roles at Fonterra, reports Bridie Witton in Stuff. Labour's finance spokesperson Barbara Edmonds questioned whether the meeting was more about performance than policy, arguing Willis should already understand how butter is priced. Willis pushed back, saying she worked in government relations and environmental strategy – not pricing – and refused to 'pre-judge' Fonterra's explanations. Her office also noted she meets with the dairy giant regularly, and the discussion this week wasn't solely about butter. Still, the intense buildup and media framing gave the impression of a high-level intervention, when in fact the levers to influence pricing remain limited. 'The lesson here is that performance politics doesn't work,' Newstalk ZB's Heather du Plessis-Allan said. 'In fact … it runs the risk of backfiring, which is exactly what's happening here.' So why is butter so expensive? As Blayne Slabbert explains in The Press (paywalled), 95% of our dairy products are exported and domestic prices reflect what those products earn overseas – a model known as export parity pricing. Recent Stats NZ data shows butter prices, driven by the global market, have surged 46.5% in a year, reaching an average of $8.60 per 500g. While world dairy prices dipped slightly in July, they remain far above historical levels. Global supply is tight, and demand – especially in China and Southeast Asia – continues to climb. 'You get to the situation we're in now where butter is at extraordinary heights and everyone wants their butter on toast,' High Ground Dairy consultant Stu Davison tells Newstalk ZB's Michael Sergel. 'We don't see it running right back to where we were five years ago.' That international appetite for grass-fed butter benefits our farmers and boosts export revenues, but leaves local consumers squeezed at the checkout. A changing role for Fonterra As butter becomes a lightning rod for public frustration at the cost of groceries, Fonterra may soon exit the retail fray altogether. The co-operative plans to sell off consumer-facing brands like Anchor and Mainland, focusing instead on its business-to-business operations. Writing in The Conversation, agribusiness professors Alan Renwick and David Dean say the move makes commercial sense. While some fear an overseas owner could lead to higher prices for consumers, they think it could help disrupt the current 'cosy' relationship between Fonterra and the supermarkets – potentially even bringing prices down. In the Herald, Clive Elliott, a barrister specialising in intellectual property, argues that the sell-off is a strategic error. 'Our prosperity and ability to remain a first-world economy depends on our ability to add value,' Elliott warns, arguing Fonterra is abandoning decades of brand equity. Regardless of who ends up owning the dairy brands, the butter pricing system is unlikely to shift dramatically. For now, New Zealanders will have to settle for an unsatisfying explanation rather than meaningfully lower costs.
