Inflation Calculator

Inflation is the general increase in the prices of goods and services over time, which reduces the purchasing power of money. In New Zealand, inflation is measured by Statistics NZ (Stats NZ) using the Consumers Price Index (CPI). Stats NZ surveys the prices of a fixed "basket" of goods and services that represents typical New Zealand household spending — including food, housing, transport, health, and education. The CPI is published quarterly (March, June, September, December quarters) and expresses price changes as a percentage compared to the same quarter in the previous year (annual inflation rate) or compared to the previous quarter (quarterly rate). The Reserve Bank of New Zealand (RBNZ) uses the CPI as its primary inflation measure and targets keeping annual CPI inflation within a 1%–3% band, with a focus on 2%. Source: Stats NZ — CPI (stats.govt.nz); RBNZ.

New Zealand's annual inflation rate for the year ending December 2025 was approximately 2.5%, according to Stats NZ CPI data. This represented a significant improvement from the inflation peak of 7.3% in June 2022, which was the highest level in over 30 years. By mid-2024, inflation had returned to within the RBNZ's 1%–3% target band, and through 2025 it stabilised around the midpoint of that band at roughly 2%–2.5%. The main drivers of inflation in NZ during the 2022–2023 period included global supply chain disruptions, elevated food and energy prices, strong domestic demand, and a tight labour market. In response, the RBNZ raised the Official Cash Rate (OCR) from a record low of 0.25% in late 2021 to a peak of 5.5% in 2023. Source: Stats NZ CPI releases (stats.govt.nz); RBNZ Monetary Policy Statements.

Inflation erodes the real purchasing power of both savings and wages if they do not grow at least as fast as the inflation rate. For savings: if you hold $10,000 in a savings account earning 2% interest while inflation is running at 3%, your real (inflation-adjusted) return is negative 1% — your money buys less each year. This is why financial advisers recommend investing in assets that historically outpace inflation, such as diversified shares or property. For wages: if your salary increases by 2% in a year where inflation is 3%, your real wage has effectively fallen by 1% — you are worse off in purchasing power terms even though your nominal pay is higher. This is why workers and unions negotiate for wage increases that at minimum keep pace with CPI. The RBNZ's 2% inflation target aims to maintain a stable environment for both savers and wage earners. Source: RBNZ; sorted.org.nz.

The Reserve Bank of New Zealand (RBNZ) controls inflation primarily through monetary policy, with its main tool being the Official Cash Rate (OCR). The OCR is the interest rate at which commercial banks borrow and lend money to each other overnight. When the RBNZ raises the OCR, borrowing becomes more expensive for businesses and households, reducing spending and investment, which in turn puts downward pressure on prices and inflation. When the RBNZ cuts the OCR, borrowing becomes cheaper, stimulating economic activity but potentially increasing inflationary pressure. The RBNZ's Monetary Policy Committee (MPC) reviews the OCR at least seven times per year and publishes a Monetary Policy Statement (MPS) each quarter. The RBNZ operates under the Monetary Policy Remit, which sets the target of keeping annual CPI inflation between 1% and 3% over the medium term, with a focus on 2%. Source: RBNZ — Monetary Policy (rbnz.govt.nz).