12:00 PM
The rate of inflation has hit four per cent - the highest annual level for more than five years.
Statistics New Zealand says the Consumer Price Index (CPI) rose 1.2 per cent in the December quarter.
The increase for the September quarter was 1.4 per cent.
Figures show 64 per cent of items experienced a price increase in the December quarter, compared to 54 per cent in the September quarter.
The most significant increase was in the price of air travel which rose 5.6 per cent.
Fruit and vegetable prices also strongly influenced the inflation rise, going up by more than five per cent.
Finance Minister Michael Cullen says he is confident inflation has peaked and will drop back significantly over the next few months.
Dr Cullen says while today's figure is higher than expected, there is no cause for alarm.
He says a number of factors which influenced the increase in the CPI are becoming less significant and a number of downward factors, such as a stronger New Zealand Dollar and cheaper petrol prices, should bring the rate down.
Dr Cullen says the restoration of income-related rents will have a positive effect on the next quarter's CPI.
HSBC economist Grant Fitzner also believes inflation will ease back to around two per cent by the end of the year, which will help keep a cap on interest rates.
But he says better economic news on the New Zealand front will not be enough to protect us from a possible US recession.
- IRN
Inflation reaches four per cent
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