Although fuel prices remained high in June, petrol and diesel prices have seen a monthly decrease, according to Statistics New Zealand’s latest Selected Price Indexes (SPI) figures.
Released on Friday, the latest SPI shows from May to June, petrol prices were down 4.2% while diesel prices decreased 12.1%.
This latest monthly decrease follows a slight drop in May, following two months of rises in March and April - driven by conflict in the Middle East, which has impacted fuel supply and caused major supply disruption in the history of the global oil market.
The SPI is a monthly series featuring about 47% of the contributors to the quarterly Consumers Price Index (CPI) - New Zealand's official measure of inflation. The SPI also includes monthly data on things like food, alcoholic beverages and tobacco, rental housing, utilities, transport and accommodation services.
While there's been a monthly decrease, in the 12 months to June 2026, prices for petrol and fuel had increased. Petrol prices were up 23.6% and diesel prices were up 57.1%.
Milk prices have increased every month for the last two years
The latest SPI data shows that food prices have increased 2.5% in the year to June. This follows a 3.2% jump in the 12 months to May.
All food groups recorded price increases between June 2025 and June 2026.
Prices for the meat, poultry, and fish group rose 6.9% and were the largest contributor to the annual increase in food prices. This was followed by restaurant meals and ready-to-eat food, up 3.1% annually.
The largest contributor to the annual increase was also standard 2-litre milk prices, with Statistics New Zealand’s prices and deflators spokesperson Nicola Growden saying: “Annually, milk prices have increased every month for the last two years.”
“In June 2024, the average 2-litre bottle of milk cost $4.00. In June 2026, it cost $5.04.”
Price increases were also recorded for dine-in lunch/brunch, takeaway coffee and porterhouse/sirloin beef.
Price decreases were recorded for tomatoes, fresh eggs and olive oil.
Monthly food prices up 0.6% in June
Food prices were up 0.6% between May and June, with the fruit and vegetables group contributing the most to the monthly increase, up 2.3%. This was followed by the grocery food group, which was up 0.4%.
Tomatoes, boxed chocolates, cucumbers and capsicums were recorded as having price increases, while price decreases were recorded for avocados, chocolate blocks and chicken pieces (excluding chicken breast).
Domestic and international airfares, accommodation
Domestic airfares decreased 4.1% monthly, while international airfares increased 1.2%.
Meanwhile, in the 12 months to June, domestic airfares decreased 2.9%, and international airfares jumped 1.7%.
As for domestic accommodation, this decreased 0.4% monthly while international accommodation was up 9.1%.
In the year to June, domestic accommodation increased by 2% and international accommodation was up 10.4%.
CPI and the Official Cash Rate
Last week, the Official Cash Rate (OCR) was raised from 2.25% to 2.50% in the Reserve Bank's July Monetary Policy Review (MPR), marking the first time since May 2023 the central bank had increased the OCR.
When it came to its decision to hike, the RBNZ noted that although oil prices have fallen, the effects of the oil shock would linger for some time.
“With inflation still above target and economic activity expected to strengthen, some further reduction in monetary stimulus is likely to be required to return inflation to the 2% target midpoint,” the RBNZ said.
In the March quarter, annual inflation, as measured by the CPI, came in at 3.1%, slightly above the RBNZ’s projections of 3%.
The RBNZ is tasked with maintaining inflation between 1% and 3% based on the CPI, specifically targeting 2%. The OCR is its main tool for doing this.
At last week's MPR, the RBNZ lowered its projection for near-term inflation because current oil futures pricing was now significantly lower than previously assumed by the Monetary Policy Committee, with annual headline inflation projected to peak at 3.9% in the June quarter before dropping to 3.3% in the September quarter.
The RBNZ had previously projected in its May Monetary Policy Statement that inflation would reach 4.2% in the June 2026 quarter and peak at 4.3% in the September 2026 quarter.
The OCR will next be reviewed on September 2 and the June quarter CPI is due out on July 21.
Food prices index
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Here is the detailed SPI information for June as supplied by Statistics New Zealand:
12 Comments
" some further reduction in monetary stimulus"
I just don't get why the RBNZ think they are stimulating the economy? They increased the OCR by 900% over 5 years and think its stimulus?
Sure you could argue 0.25% was way too low in the first place (I agree), but 2.5% is pretty much average over the last 18 years, it hasn't been particularly stimulating in that time, why is it now? https://www.rbnz.govt.nz/monetary-policy/monetary-policy-decisions
There has been a lot of money printing since 2009 Jimbo, which (in combination with several energy shocks) has resulted in inflation being well above where it should be. A decade ago I would have agreed with you, but this decade is quite a different kettle of fish. I think that (for the next 18mths - 2yrs anyway) the neutral rate should be around 3% - possibly as high as 3.5% for a period of time. I hope that's not the case, but I suspect it will take quite a bit of pain before we see inflation come back down to 2%. It's been 6 long years since we've had inflation at or below 2%.
"inflation being well above where it should be" - it's only 0.1% out of band. Sure its going to increase because of fuel shortages, but that isn't because of stimulus.
"before we see inflation come back down to 2%" - why are we so fixated on 2% when no other country seems to be. For example this is a summary of the RBA mandate:
The mandate has two main goals:
Price stability: Keeping consumer price inflation between 2% and 3% on average over the medium term.
Full employment: Generating the highest level of employment that is sustainable without causing inflation to rise.
2% was decided (back in the 80s I believe) as the sweet spot between an economy that is struggling and one that has prices starting to bolt. 3% is quite high, with the next read likely to be closer to 4%. If you look at the Rule of 72, at 3% inflation, it will take 24 years for prices to double, while at 2%, it would take 36 years. Since 2021, inflation has averaged around 4.3%. At that rate, you're looking at prices doubling every 17 years.
Likewise 6% plus unemployment is high, and that is probably where we are heading if they achieve 2% CPI. Which is more important?
If unemployment is high I'd prefer they be slightly out of band
Interesting milk cost. Sorry if this is a bit dense, happy to stand corrected on my maths.
Fonterra farm gate price increased 23.8% from $7.83/kgms in 2024 to the mid Point estimate of $9.70 in June 2026. Retail milk price increased 26%.
But, a caution, the fonterra farm payout is on milk solids, not litres. Milk solid (MS) per litre of milk varies between years. In 2022/23 MS yield was 9.04%, 23/24 was 9.2% and 24/25 was 9.42%.
Relating that back to farm gate, 10,000kgms in 2024 with a MS yield of 9.2% requires submission of 108,700lt. And in 2025, that 10,000kgms at 9.4%MS yield, requires 106,400 litres.
Converting the MS price to $/lt whole milk, in 23/24 with a $7.83/kg price, the wole milk value at farm gate was $0.72/lt. And in 24/25 at farm gate payout of $10.16/kg, whole milk value at farm gate was $0.91/lt. That's a whole milk value increase of 26%, at farm gate, matching the stats report.
As an aside, in 2022/23 when yield was 9.04%, 10,000kgms required 110,000lt of raw milk submission. At $8.22/kgms, that would give a whole milk value of $0.75/lt at farm gate. If that was the comparison point, increase has been 23%.
My conclusion is that the margin between the farm gate and retail shelf has increased by 3%. Either added cost or increased profit take along the value chain.
Great analysis, thanks.
Electricity, Gas, Petrol and Diesel all big hikes, a.k.a energy. No wonder more are doing the sums and investing in Solar and battery storage. ROI only getting better as the 'leccy prices go up faster, and what faith do we have that the govt will regulate the electricity sector in a way that won't case large price increases (an greater profits and tax take to excuse govt spending) from data centre usage. I am banking they won't and we will see further increases. The more people use AI then the more energy demand there will be, and we all know that with big business, the govt always make concessions to get them started in NZ.
Governments and economists fail to understand that energy is everything. GDP is energy, 'Growth' is energy, jobs is energy.
The promise of financial benefit from a prosperous economy is hollow when we allow our energy sector to be continually mismanaged, undervalued and simply viewed as a means of income.
Is it really that bad? I can't remember the last time we had a signifcant power cut or the petrol station ran out. In many countries that's a daily occurrence.
Aus seem to have more energy issues than us yet more GDP and jobs.
It’s early days on our slippery energy slope. Declining primary energy production since 2019, ever increasing reliance on imported energy in an ever more volatile world. Time will tell.
Shame that fuel prices are on the increase ...again.
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