The inflation rate is down, only just, but vegetable price inflation just hit the highest levels this century, and the overall inflation rate was higher than anticipated.

It should have peaked - economists agreed on that much about New Zealand's inflation rate ahead of today's Consumers Price Index announcement.

And the latest data shows they were right, by the slimmest of margins, with inflation for the year to September at 7.2 per cent.

Stats NZ said the CPI rose 7.2 per cent, well above expectations of about 6.5 per cent.

Thanks to falling fuel prices across the past few months, inflation was expected to land between 6.5 and 7 per cent.

Instead, the 7.2 per cent leap followed an annual increase of 7.3 per cent in the June quarter, and an annual increase of 6.9 per cent in the March 2022 quarter.

Those June figures showed inflation was at a high not seen since the start of the 1990s.

Inflation culprits outed

The main driver for the 7.2 per cent annual inflation in the September 2022 quarter was housing and household utilities.

Rising prices for construction, rentals for housing, and local authority rates were all pushing up prices.

For the quarter, the consumer price index rose 2.2 per cent. And in the latest quarter, vegetable prices rose an astonishing 24 per cent.

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"This is the largest quarterly rise in vegetable prices since the series began in September 1999," prices senior manager Nicola Growden said.

"Tomatoes, lettuce, and broccoli drove this rise in vegetable prices."

Prices for the construction of a new house increased 17 per cent in the September 2022 quarter compared with the September 2021 quarter.

Stats NZ released the new figures at 10.45 this morning.

On the domestic front, a tight labour market is keeping costs high.

Market reacts

On financial markets the 2-year swap rate jumped to 5.05 per cent on expectations higher inflation will mean the Reserve Bank needs to lift the official cash rate higher.

The New Zealand dollar was little changed after the release. It bought US56.40c.

Economists were looking for signs that non-tradable (domestic) inflation was easing.

"The bulk of the decline in headline inflation is expected to come from a sharp drop in petrol prices," ANZ senior economist Finn Robinson said ahead of the data release.

"While that's absolutely welcome, the fact that there's unlikely to be any sign of a broad-based easing in underlying inflation pressures means monetary policymakers can take only limited comfort from the headline fall."

ANZ is forecasting annual non-tradeable (domestic) inflation stayed high at 6.3 per cent, and measures of core inflation remained strong, but may have eased from recent highs.

"All up, [the] inflation report is unlikely to contain the evidence needed to convince the RBNZ that underlying inflation has turned the corner," Robinson said.

"Unless there's a step change in the outlook, we see the RBNZ on track to lift the OCR to a peak of 4.75 per cent in May 2023."