What 3% inflation means for your wallet and the next rate cut – The Front Page

Inflation has risen even further.

Latest Stats NZ figures show inflation reached 3% in the year to September.

Economists had tipped to hit the top end of the Reserve Bank’s target band of between 1% and 3%.

But some say the period of circa 3% could be short-lived.

NZ Herald business editor at large Liam Dann told The Front Page that a few basic things have made it feel worse than 3%.

“Power prices are the real headline. 11.3% for the annual rate, the highest annual increase we’ve had in New Zealand since 1989, so 36 years. People have really felt that.

“We had rates up 8.8% across the board, roughly, and they tend to get counted once a year in the September quarter. So, that’s when we see them and contribute. They were actually up something like 12% the year before. But that’s still a lot.

“Food prices, we’re up 4.6% for the year ... People have obviously been feeling that with dairy prices, butter, beef, some of those things that are getting good export dollars for New Zealand but are making it painful for shoppers,” he said.

Dann said we should probably still see the Official Cash Rate cut expected for next month.

“Some economists see some risk of another cut maybe in February, or that the Reserve Bank might do 50 basis points in November.

“I think there are some signs that things are starting to turn. A lot of the bad news is in the rear-view mirror. It’s just the way that we collect data. So, we’re seeing it at the tail end.

“Unemployment will probably rise in the next lot of stats, and it will be ugly as well. But, the bank’s primary job now, its single mandate, is to look at inflation,” he said.

Labour leader Chris Hipkins and finance and economy spokeswoman Barbara Edmonds have unveiled their first economic policy of the 2026 campaign. Photo / Dean Purcell

Meanwhile, the Labour Party has broken its silence on what it thinks will help the economy.

Leader Chris Hipkins and finance spokesperson Barbara Edmonds unveiled their first economic policy ahead of the 2026 election yesterday.

A wealth fund, dubbed the New Zealand Future Fund, intends to take the dividends of some Crown assets and redistribute them into Kiwi businesses in the hopes of creating new jobs.

The proposal comes with few costings, details of what assets will be included in the fund or projections about how many jobs may be created as a result.

Dann said it was a big concept, but not new.

“I think that Labour’s pitching this, and these are my words, as a kind of side hustle for the Super fund. So that the Super fund would have a boutique fund, off to the side, that is very specifically for New Zealand businesses.

“Countries like Singapore do it; they’ve been very successful and have billions of dollars of assets.

“The goal is that you actually make money, because you’re investing in these companies and taking a stake, as well as providing capital and support for them to get going, and boost the New Zealand economy.

“There’ll be a hard criticism from, say, the Act Party, because they see that as the government picking winners, and they look at the failures over time of governments doing that. And sometimes governments get it wrong. Why is the government trying to pick one company over another and decide which one?” he said.

Listen to the full episode to hear more about:

• Cost of living realities
• The economic outlook for 2026
• Tradable vs non-tradable inflation
• Labour’s latest economic policy.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting who joined NZME in 2016.

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