The latest rise in inflation won't stand in the way of another cut to the Official Cash Rate next month

Annual inflation is now 2.7 percent -- up from 2.5 percent three months ago -- due to sharp rises in council rates, electricity and basic food items.

But core inflation is tracking lower, and domestically-driven non-tradeable inflation has reached a four-year low.

But ASB Senior Economist Mark Smith says inflation is cooling in many areas, like housing-related costs.

He says annual construction cost inflation has reached its lowest point since 2009, and rental costs are also falling.