Mortgage owners in New Zealand should brace for pain, with higher than expected inflation at 7.2 per cent for the year to September, keeping inflation near 30-year highs.
Stats NZ found the consumers price index (CPI) rose by 2.2 per cent in the last quarter, fuelled by the increased cost of housing, travel, and vegetables.
The result is a slight easing of the 7.3 per cent measured in the year to June - the highest figure since 1990 - but well above all forecasts.
The Reserve Bank of New Zealand's forecast, made in August, was for 6.4 per cent.
More recent predictions from local banks ASB (6.5 per cent), Westpac (6.9), ANZ (6.6) and Kiwibank (6.8) were all topped, meaning they are likely to revise up their official cash rate (OCR) forecasts, and with it, their lending rates.
"We now expect a 75bp increase in November, a 50bp hike in February and final lift in April ... implying a peak of 5.25 per cent," ASB senior economist Mark Smith said.
Westpac and Kiwibank also raised their forecasts for an OCR peak of 5 per cent.
Most concerningly, non-tradeable inflation - which measures domestic demand and supply - is running at 6.6 per cent, the highest figure since the series began in 2000.
Stats NZ spokeswoman Nicola Growden said housing was the biggest factor driving inflation.
New house construction costs 17 per cent more in September than it did a year ago.
"The cost to construct a new house has continued to rise with supply-chain issues, labour costs, and higher demand, all of which combine to push up prices," Ms Growden said.
Rents are up 4.6 per cent in a year, and rates have grown 7.3 per cent.
Beyond housing costs, the soaring price of petrol (up 19 per cent) and diesel (up 72 per cent) in the last year are also hurting Kiwis - though petrol prices have softened in recent months.
International flights have leapt 20 per cent in September's figures compared to the June result.
Vegetable prices are also up 24 per cent in the September quarter from June - the largest quarterly rise in vegetable prices since Stats NZ started recording them in 1999.
"Tomatoes, lettuce, and broccoli drove this rise in vegetable prices," Ms Growden said.
In parliament, the opposition seized on the shock figures, saying "inflation has become embedded into the economy on Labour's watch".
"Out of control inflation means most Kiwis will be poorer tomorrow than they were today," opposition finance spokeswoman Nicola Willis said.
Finance Minister Grant Robertson said the figures were still "heavily influenced by global factors", citing Russia's invasion of Ukraine and pandemic-related supply constraints.
The opposition wants an independent investigation into the RBNZ's handling of the pandemic.
On Tuesday, leader Chris Luxon said he wanted Mr Robertson to extend Governor Adrian Orr's term - due to expire in March 2023 - so that the next government could decide on the appointment for the next five-year term.
Australia's CPI, last measured in June, was 6.1 per cent annually, hitting 1.8 per cent in Q2, compared with New Zealand's 1.7 per cent.
New Australian figures are expected next week.
