Finance Minister Nicola Willis is hoping inflation can drop back into the Reserve Bank's target band off the back of the latest data.

The annual inflation rate for 2025 was 3.1 percent, up from 3 percent for the year to September.

Willis says the Government supports the Reserve Bank getting back to their target band of 1 to 3 percent.

"It's inflation that's the broadest driver of the cost of living. At the same time, interest rate reductions have been really important to recovering our economy after a very difficult period, but it's always the case that as the economy recovers, you do expect that eventually interest rates do go up."

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