Headline inflation has risen for the first time in three years in New Zealand, but remains in the Reserve Bank's target band.
Stats NZ on Thursday revealed prices used to measure the consumers price index (CPI) grew by 2.5 per cent in the 12 months to March, up from 2.2 per cent growth across 2024.
New Zealand has endured a post-pandemic inflation shock, leading the Reserve Bank to rapidly increase rates and induce a recession to tame out-of-control price growth.
Despite the small uptick, Finance Minister Nicola Willis struck a triumphant note on the release of the figures, saying it confirmed "the era of high inflation is over".
"This is the third consecutive quarter that inflation has remained within the bank's target range," she said.
"It means people should be able to look forward to more rate reductions in the coming months."
The official cash rate (OCR), which peaked at 5.5 per cent, has already been lowered to 3.5 per cent.
Banks are increasingly confident that the Reserve Bank will continue to cut through 2025, with ANZ joining Kiwibank to predict the OCR will sit at 2.5 per cent by October.
Those forecasts are built off a sluggish Kiwi recovery from its 2024 lows, and global uncertainty driven by trade concerns.
CPI grew by 0.9 per cent in the quarter, driven by a rise in housing-related costs.
Council rates (at 12.2 per cent growth) and rents (3.7 per cent) were both major drivers, as was construction price.
Tertiary education fees also jumped 22.6 per cent in the first quarter of 2025, coinciding with the government's shift to remove free first-year TAFE costs, shifting the free year to the final year of study.
The cost of cigarettes also grew by 3.9 per cent in the previous three months, though was lower-than-usual growth.
The annual and quarterly growth result was higher than forecast by many analysts, though it is unlikely to prompt the Reserve Bank to change course on its run of rate reductions.
