New Zealand's annual inflation accelerated in the third quarter, reaching 3.0%, which aligns with analysts' expectations and is at the upper end of the central bank's target range, according to official data released on Monday.

The consumer price index increased by 1.0% in the third quarter compared to the previous quarter, faster than the 0.5% rise in the second quarter but in line with a Reuters poll.

The Reserve Bank of New Zealand (RBNZ) aims for annual inflation to stay between 1% and 3% over the medium term. The RBNZ, which had predicted annual inflation would be 3% for this quarter in its August forecast, recently cut the cash rate by 50 basis points to 2.5%, citing concerns over economic weakness. In its latest review earlier this month, the bank acknowledged that inflation had ticked higher but indicated that, due to spare capacity in the economy, it expected inflation to return to 2% by mid-2026.

ANZ senior economist Miles Workman noted that while high-frequency data and inflation expectations will be key indicators in the lead-up to the November monetary policy statement, inflation does not pose any challenge to the central bank's August forecast. He added that underlying inflation is slowing largely as anticipated.

Annual non-tradable inflation stood at 3.5%, down from 3.7% in the second quarter. The New Zealand dollar remained largely unchanged at $0.5732.

Analysts pointed out that uncertainty surrounding U.S. tariffs and ongoing geopolitical tensions continue to impact inflation expectations and monetary policy decisions. Statistics New Zealand attributed the third-quarter inflation result to increases in electricity prices, rent, and local government taxes. "Annual electricity price rises are the highest since the late 1980s, when major reforms were carried out in the electricity market," said Nicola Growden, a spokesperson for Statistics New Zealand.

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