KEY POINTS:
Inflation jumped to 3.2 per cent in December, and price rises were steepest among necessities such as petrol, food and electricity.
"Inflation is well and truly chewing into the disposable income of the average New Zealander, and that's before you take account of rising interest rates," Bank of New Zealand economist Stephen Toplis said.
Petrol rose 5.4 per cent in the quarter, making 16.9 per cent for the year; food prices rose 1.5 per cent, or 4.4 per cent for the year; and electricity rose 1.2 per cent, or 6.5 per cent for the year.
Prices for consumer electronic goods, domestic air fares and early childhood education fell.
"This is great news for those who have young kids, fly around the country or want the latest cellphone or plasma TV," Mr Toplis said.
"But for those just trying to get by there is some nasty news in the consumers price index."
The annual inflation rate has averaged just over 3 per cent over the past three years.
The bank forecasts it to remain there through this year.
