Financial Glossary

Inflation

Inflation is the rate at which the general level of prices for goods and services rises over time, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI), which tracks the cost of a basket of common goods and services. Central banks target moderate inflation (typically 2%) as a sign of a healthy economy.

Example

If the inflation rate is 3% per year, an item that costs $100 today will cost approximately $103 in one year. Over 10 years at 3% inflation, that same item would cost about $134. This means your savings need to grow at least at the inflation rate to maintain purchasing power.

Frequently Asked Questions

How does inflation affect my salary?

If your salary increases by less than the inflation rate, your real income (purchasing power) is decreasing. When negotiating raises or evaluating job offers, consider whether the increase keeps pace with or exceeds inflation.

How do I protect my savings from inflation?

Investing in assets that historically outpace inflation (stocks, real estate, TIPS) can protect your purchasing power. Keeping large amounts in low-interest savings accounts means your money loses value over time. Use our investment calculator to model growth against inflation.

Related Resources

Investment Calculator Retirement Calculator Retirement Planning Guide All Glossary Terms

Official Sources

New Zealand calculators use data from the following official government agencies:

Inland Revenue (IRD) — Income tax brackets, KiwiSaver rules, and ACC levies.
Stats NZ — Wage data, employment statistics, and cost of living indices.
Reserve Bank of New Zealand (RBNZ) — Official cash rate and monetary policy data.

Methodology

Our New Zealand calculators follow tax brackets, KiwiSaver contribution rates, and ACC levies published by Inland Revenue (IRD). Economic data is sourced from Stats NZ. Mortgage calculations use RBNZ official cash rate and market averages. All figures are for educational purposes.

Data Sources

All tax brackets, contribution rates, and economic data used in our calculators are sourced from the official government publications listed above. Rates are updated at least annually to reflect the latest tax year and regulatory changes. Users should verify critical figures with official sources or qualified professionals.

Last updated: June 2026. Information may change; always verify with official sources.

Last Updated: June 2026 — Reviewed Against Official Sources