The cost of living has had the biggest increase in a decade, due to higher costs for construction and petrol.
The consumer price index, which measures changes in the price of everyday products, rose to an annual rate of 3.3 percent in the June quarter.
The biggest contributors were construction costs - particuarly around new house building - up 7.4 per cent, petrol up 16 per cent, and rent, up 2.9 per cent.
"Higher prices for building houses reflect both supply-chain problems and high demand," Statistics NZ prices senior manager Aaron Beck said.
"Several construction firms have told us that it is hard to get many of the materials they need to build a house, and that there are higher labour and administration costs.
"In addition, in the year to May 2021, $18.3 billion of residential building work was consented, up 18 percent on a year earlier."
The rent price increase was driven by the three main centres with a 0.5 percent increase in Auckland, 1.3 percent in Wellington, and 0.6 percent in Canterbury.
Transport costs also contributed to the rise with a 9.4 per cent increase due to higher prices for used cars and international airfares. Petrol prices also increased.
Statistics NZ said some of the overall price increases were magnified due to products being cheaper last year when the country was in a Covid-19 lockdown.
The last time inflation rose this much in a quarter was when goods and services tax increased in 2011.
CPI rose 1.3 per cent over the June quarter compared to March 2021. Housing and household utilities rose 1.9 per cent, food costs rose 1.5 per cent and transport was up 2.2 per cent.
