New Zealand inflation rates highest in over 30 years

If you think the household bills are creeping up, you're not wrong, inflation has had its biggest increase in 31 years - up a whopping 5.9 percent last year.

The soaring cost of construction is the main driver behind high inflation.

"Everything has gone up - whether that is timber, steel, insulation and claddings. The whole lot, building and petrol stations," Chief Executive of Master Builders Association David Kelly says.

Annual inflation is the highest it's been since June 1990, with housing and transport being the biggest contributors.

According to Stats NZ, prices for new house builds rose 16 percent compared to 2020, rent was also up 3.8 percent overall and fuel soared by 30 percent.

Kiwis said they are noticing the rise in prices.

"My weekly pay is not even enough to fill my car or my cupboards," One person said.

"Sometimes you can't afford to buy a bottle of milk, it's a bit all over the place to be honest," Another said.

"The price of petrol is the biggest one that I notice," One man said.

"We're really hearing a lot about three main areas, petrol biggest one, closely followed by food and then rent is a huge issue for many many people," Chief Executive of Consumer NZ Jon Duffy says. 

While prices soar, wages aren't. The latest Stats NZ data shows 42 percent of kiwis didn't get a pay rise last year and if they did it was less than inflation.

"Inflation disproportionately impacts lower-income New Zealanders and that's a real problem for us as a society," Duffy said.

To bring prices down interest rates are expected to steadily climb, hitting homeowners.

"You're looking at a mortgage rate now of mid 3s, it'll be in the mid 4s, mid 5s [percent]," Kiwibank Chief Economist Jarrod Kerr says.

But for those building a home, there is some good news. Construction costs are expected to ease later this year.