First Impressions: NZ Monthly Selected Prices Update, March 2025
With continued strength in food prices, we’ve nudged our March quarter inflation forecast up to 0.8% (in line with the RBNZ’s forecast). Meanwhile, chocolate prices have spiked ahead of Easter.
Key points:
- We’ve nudged our forecast for Thursday’s March quarter CPI higher to +0.8% (up from 0.7% previously).
- Our updated forecast would take the annual inflation rate to 2.4% in the year to March (up from 2.2% at the end of last year).
- March quarter inflation looks set to be in line with the RBNZ’s last published forecasts from their February MPS.
- The past month saw stronger than expected rise in food prices, with continued gains in grocery food prices and a lift in meat prices.
- Rental inflation remains modest.
- Chocolate prices spiked ahead of Easter.
In the detail
Stats NZ’s monthly prices data provides updates on 45% of the CPI, including several of the more volatile items.
The March quarter update revealed a larger than expected increase in food prices over the past month. In particular, there have been continued large increases in grocery food prices. Much of that is due to strength in the prices for dairy products.
Stats NZ also resumed publishing rental data, which rose 0.3% over the past month and 0.2% last month. That was as expected (though it is still relatively modest compared to history).
Looking at the other prices groups:
- Alcohol and tobacco prices were largely as expected, rising 0.1% in March.
- Petrol prices fell 2%, reflecting falls in global oil prices.
- On the transport front, domestic airfares were up 2%, while international airfares were down 4%, both largely as expected.
- Overseas holiday prices were up nearly 9%, much more than expected. That likely reflects the lower NZ dollar.
What’s this mean for our March quarter inflation forecast?
With continued strength in food prices, we’ve nudged our forecast for March quarter CPI up to 0.8% (up from 0.7% previously). That was mainly due to today’s stronger than expected food prices data.
That revision leaves our updated forecast in line with the RBNZ’s February MPS forecast. We also have the same forecasts for non-tradables (+0.9%) and tradable inflation (+0.7%).
The annual inflation rate is set to rise to 2.4%, up from 2.2% at the end of last year, but still comfortably within the RBNZ’s target band. Core inflation is also expected to remain well contained.
Our earlier preview of the March quarter CPI provides more detail on our forecast.
Inflation putting the dampener on Easter celebrations.
Chocolate prices rose nearly 5% ahead of Easter and are up 16% over the past year. As well as a drop in the NZ dollar, global cocoa prices have pushed higher. It seems even the Easter Bunny can’t fight inflation.
Media contact:
Satish Ranchhod, Senior Economist
+64 9 336 5668
+64 21 710 852
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