Prime Minister John Key says domestic inflation pressure is weak and rising prices are being driven by the cost of oil.
The latest Consumers Price Index data puts inflation at 4.5% for the year to March - the highest level since 2008.
Labour says low and middle income earners are struggling with rising prices, and the Government must accept its share of the blame.
Mr Key says people were compensated for the GST increase through tax cuts and the rising cost of oil is out of the Government's hands.
However, Labour finance spokesperson David Cunliffe said that the pressure on budgets is not merely external.
He said a Labour Government would increase the minimum wage and remove GST from fruit and vegetables.
