Inflation is the term used to describe a rise of average prices through the economy. It means that money is losing its value. This section provides a variety of resources that explain inflation and deflation. This connects to how the Reserve Bank uses monetary policy to maintain price stability.
Former Chief Economist, John McDermott, explains how inflation is measured and how it manifests itself in everyday life. He also explains the importance of maintaining price stability.
New Zealand's Consumers Price Index (CPI)
Since 2000, New Zealand CPI (Consumers Price Index) inflation has averaged around 2.15 percent. This compares with averages of 2.4 percent in the 1990s, and averages of over 11 percent for the previous two decades. Since September 2002, the inflation target has been to keep inflation within a range of 1–3 percent on average over the medium term.
Notes: CPI is published on a base of 2006 Q2=1000. The plotted series excludes interest rates, which were removed from the CPI regimen in 1999, but includes GST effects.