Annual inflation, as measured by Statistics New Zealand’s Consumers Price Index (CPI) increased to 4.1% in the June quarter – the highest annual inflation rate NZ has seen since it hit 4.7% in December 2023.
Higher petrol prices was the main contributor to the increase, no surprise as conflict in the Middle East has impacted fuel supply and triggered major supply disruption in the global oil market.
Electricity, local authority rates and payments, construction of new housing and other vehicle fuels and lubricants (like diesel) also drove the annual CPI increase.
The latest inflation figure comes after the March quarter remained at 3.1%, for the second consecutive quarter. Annual inflation continues to breach the Reserve Bank’s (RBNZ) target range of 1% to 3%.
The latest annual CPI inflation figure was above the RBNZ’s projection of 3.9% for the June quarter but in line with forecasts from bank economists. The RBNZ had updated its inflation forecast at its July Monetary Policy Review (previously the RBNZ had projected 4.2%), where it increased the Official Cash Rate (OCR) to 2.50%.
Last week, Westpac and BNZ economists were projecting 4.1% while ANZ and ASB had gone for 4.0%. Kiwibank was projecting 4.2% (this forecast hadn't been updated since oil prices dropped in June and their economists had hoped to see a figure closer to 4.0%).
Consumer price index
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More than 80% of CPI basket saw an annual increase in price
Petrol was the largest contributor to the annual inflation rate, up 27.5%.
Stats NZ prices and deflators spokesperson Nicola Growden said; “higher petrol prices accounted for almost a quarter of the 4.1% annual increase.”
Stats NZ said diesel prices were up 71% but with New Zealand households spending eight times more on petrol than diesel, petrol prices have a larger impact on the CPI than diesel prices.
If petrol and diesel prices had not changed – the CPI would have increased 2.9% in the year to June, Stats NZ said.
Electricity was up 12%, local authority rates and payments increased 8.8% and construction of new housing rose 2.7%.
Health insurance saw a 19.2% annual jump, which Growden said reflected general increases in premiums.
Lower prices were recorded for oil and fats, which were down 9.1%, and real estate services decreased 4.6%.
In the year to June, 83.4% of the CPI basket increased in price while only about 15% of the basket fell in price.
Stats NZ said in the 12 months to June, 14.4% of the CPI basket increased by between 3.0% and 5.0%, up from 9.6% in the 12 months to March.
Higher petrol prices the largest contributor to quarterly increase
The CPI increased 1.5% for the June quarter, compared to a 0.9% rise in the March quarter.
Higher petrol prices were the largest contributor to the quarterly inflation rate, up 20.1% and diesel prices increased by 47.7%.
Growden said: “Together, petrol and diesel accounted for almost two-thirds of the 1.5% quarterly increase.”
Petrol prices increased in April but fell in May and June. A deal announced in June between the United States and Iran offered a brief global reprieve as share markets rose and oil prices fell. But now the deal is in doubt, as the US and Iran have resumed strikes against each other.
Alongside this, construction of new housing was up 1.6% and electricity was up 4.4% - both contributed to the quarterly CPI increase.
“The quarterly rise for construction was the largest since the December 2022 quarter,” Growden said.
“Respondents reported that higher costs for materials, subcontractors, fuel and labour contributed to rising prices for new housing.”
The purchase of housing was up 1.6% which contributes 10.2% to the quarterly CPI rise.
Lower prices were recorded for fruit, which decreased 8.5% and domestic accommodation services which was down 12%.
Non-tradeable inflation up 3.4%
The latest CPI figures show annual tradeable (imported) inflation went up 4.9%. Higher prices were recorded for petrol which jumped 27.5% and other vehicle fuels and lubricants, up 71.0%.
These were partly offset by oils and fats which fell 9.1% and audio-visual equipment which was down 18.4%.
Non-tradeable annual inflation (goods and services that don’t face overseas competition but can be influenced by foreign competition) increased 3.4% with higher prices recorded for electricity, which was up 12.0%, and local authority rates and payments jumping up 8.8%.
Lower prices were recorded for real estate services, which dropped 4.6%, and milk, cheese and eggs decreased 9.0%.
50 Comments
Next OCR 19 August. Up up and away will continue to pressure the specu dollar.
Popcorn
The one year swap was tracking a lot higher yesterday so will have to see whether it jumps again today if markets are surprised by this inflation data.
Was the saying ‘survive until ‘25?’. Well I think it might be more like 2030 before we see any real positive economic news (and 2030 isn’t that far away now! A lost decade from the COVID madness). We also risk a repeat of the 70’s with another dose of rising inflation and interest rates.
Double jump incoming
"Temporary blip" RBNZ will "look through" it
RBNZ always too late to act whether increase or decrease
"Next OCR 19 August. Up up and away"
Yep, that will drive the price of imported fuel down ! (sarc)
Just like how dropping interest rates for the past 30 years pushed up the deflated prices of the goods and services we imported from slave labor in Asia that was recorded in the CPI?
Lifting the OCR will help lift the NZD, which will indeed lower our energy import costs.
This is largely driven by fossil fuels, which the current Govt seems to be addicted to. NZ needs to wean itself off volatile, foreign energy and prioritise locally grown, renewable energy as well as mass electrification.
Meanwhile we are committing existing generation for further Datacenter projects that make this increasingly difficult to do.
Your talking 10 to 15yrs away, from any mild weaning, slightly away from FF.
Then all the petrochemicals side, will only increase in consumption.......
This NZ baby is suckling on the FF teat, for a loooooong time.
THE RBNZ asleep at the wheel, they were much too late to raise, now the OCR is going to the moon!
Strap in Speculandlorders!
The RBNZ can't control inflation caused by imported price shocks by dampering demand and disposable income further. Double whammy for the public.
But they spent 3 decades dropping interest rates because we were importing deflation from cheap foreign goods/services measured in the CPI!!
You can’t have it one way for decades, then say ‘oh hey the RBNZ can’t change inflation from stuff we import’ after having behaved that way for decades with all of the bad side effects of having done so!! (Ie very high private debt vs GDP as interest rates were dropped too low)
To do so and say so is a case of one wanting to have their cake and eat it too - it doesn’t work. You can’t have it both ways.
"You can’t have it both ways."
Yes you can, as evidenced by the fact it's being done. Destroying the value of currency by inflating it's value away is the great unspoken outcome of the debt funded exponential growth cult. Western capitalist society can't afford itself any longer without exponential increases in borrowed cyberspace digits, and it can't afford to pay interest on that digit creation either.
Sounds sustainable (not...) -ie you can't have it both ways in the long run. Markets always find equilibrium in the long run - regardless of the tomfoolery that might be used to avoid consequences in the short run.
Markets (unfettered) never find equilibrium....they may pass through it, but the constant of change necessitates that equilibrium will always be itself changing....that change takes many forms, be it technology, price, resources, efficiency or even fad.
Good point - I agree
You can’t have it one way for decades, then say ‘oh hey the RBNZ can’t change inflation from stuff we import’
We usually align on a number of things IO, but we both know fuel isn't just material stuff, nice to haves, or useless consumerism.
Fuels are what allows the economy to operate, and smashing demand for consumer goods and services by raising the price of debt for businesses (increasing costs for consumers as a double whammy as we have seen in the great hiking period of Orr) and also removing disposable income for mortgage holders, doesn't change that Tom, Dick and Harry all have to still get up in the morning and drive to work in the majority of the country.
I don't see it as a cake and eat it scenario, I just think that recent evidence has shown you increase pressure on businesses via debt costs and they pass it through, which is a double whammy with higher fuel costs. Add in that businesses will be seeing these article headlines and thinking of hiking prices again accordingly.
RBNZ may sit on their hands if fuels costs stay down again for the foreseeable future, and as you've already noted in the past, it's the bond markets that are the indicator far more so than the OCR.
Yes, with this current Govt it would take 50 years to go fully electric, so here's hoping they exit stage left in November.
Having 1.4 billion people helps...
"Once an 'embarrassment' China's EV industry now leads the world"
https://www.abc.net.au/news/2026-07-21/china-ev-dominance-over-europe-u…
Electricity was up 12%, local authority rates and payments increased 8.8% and construction of new housing rose 2.7%.
Health insurance saw a 19.2% annual jump, which Growden said reflected general increases in premiums.
The usual cartels are responsible for underlying inflation.
Growden said: “Together, petrol and diesel accounted for almost two-thirds of the 1.5% quarterly increase.”
While the rest is transitory. But we'll kill any chance of growth anyway.
Health insurance: Higher payouts form an aging population boom all needing to make claims in a similar timeframe. Greater payouts = greater premiums for all. You'd think they could foresee this decades in advance.....but they took the priofit instead and are now offloading the risk to the consumer.
As for the rest, Hamish has already said it. Find ways to best insulate yourselves from oil spikes and electricity prices. NZ is realising they have relied on the govt for too much for too long and now they are more and more skeptical things will get better from govt action, so are acting accordingly. We all need to remember that we are not all as safe and protected as we think we are, and complacency will breed a loss of skills, knowledge and entrepreneurial spirit for which NZ is well known for.
" NZ is realising they have relied on the govt for too much for too long and now they are more and more skeptical things will get better from govt action, so are acting accordingly."
Im curious as to what you may think the alternative is when the government (all) largely determines how much and where resources are available, even if only by neglect.
It seems the incentives to buy an EV and install solar panels on one's roof are getting more compelling.
Savers still subsidising borrowers and banks.
This is a poorly worded article, confusing annual and quarterly inflation hence hiding the trends excluding fuel.
Removing fuel from the June quarter figure takes quarterly inflation to approx 0.6%, a drop from March quarter, and well within the 1-3% band annualised.
The CPI increased 1.5% for the June quarter, compared to a 0.9% rise in the March quarter.
Higher petrol prices were the largest contributor to the quarterly inflation rate, up 20.1% and diesel prices increased by 47.7%.
Growden said: “Together, petrol and diesel accounted for almost two-thirds of the 1.5% quarterly increase.”
Its good for RBNZ to signal intent. They also need to decide where neutral is, and also support the currency and employment, so its a finely balanced decision. Carry a big stick and speak softly. Pause at the next review.
Big problem for RBNZ is..... The Fuel increases will leak into other areas of the economy and rises will tip into other sectors and inflationary rises will spread everywhere, like an uncontrolled cancer.
The OCR will be much higher, come late 2026 and into 2027!!
Fuel inflation may be passed on but its not a given, RBNZ said at last review they hadnt seen widespread evidence of it. And quarter on quarter fuel has deflated anyway. Exposed businesses have implemented a FAF, this is well-ordered and so far tracking down MOM, not margin improvement as there is no scope for that with demand destruction well established.
I think most commentators on this site are not exposed to reality of the commercial markets. Nobody is hiring, nobody is hitting budget, non-tradeable inflation post-covid is still playing out as long-term contracts renew, but its absolutly not embeded. Areas of the economy where supply is constrained will always be exceptions, but we are nowhere near the sort of conditions where rate rises are requried to cool demand.
Nobody is hiring, nobody is hitting budget
Agreed. I swim around in the commercial market daily and see many different sector directly. The real issue is to much non performing debt in businesses and in households. Those recently jumping into housing are in a world of hurt and in most cases underwater. Those yet to enter are leaving in numbers that make up a A380 daily. Youth unemployment is at record levels as unskilled people at minimum wage, circa 50k pa, is untenable for most.
Some sectors are more in the crap than others. Builders cannot make money at today cost of land. Land holders are usually high net worth individuals, foreign and/or domestic, who can just sit on their hands and wait. Meanwhile that sector is dead in the water outside of the parts of the South Island. Thus another generation of qualified young tradie's pack up and take the literal A380 westward.
If we ever need a reason to reimplement a Land Tax its this tax avoiding mess we have today.
Still busineses and housholds holding cash, but there is just no confidence to spend. Everytime we get a bit of confidence RBNZ snuffs it out. Their recency bias is destroying NZ vs other ecomomies. If it takes down our current govt, it wont be the young leaving, it will be the investors giving up on NZ. National seem to have a longer term plan that investors are showing patience over and will lead to sustainable returns (not saying growth - its a trigger word for some). Still companies trading on unpaid GST and Income tax, the downturn hasnt cleaned out the cheaters yet.
Still businesses and housholds holding cash, but there is just no confidence to spend.
Some bold businesses are still willing to spend as buying capital equipment isn't smart on the downswing, but ideal at the bottom of the economic cycle. The govt changes to depreciation have helped in this area from those I know buying machinery now.
Residential-wise, the biggest trend I see is people trying to insulate themselves from compulsory costs such as fuel and electricity given the ROI just keeps getting better with higher energy prices. This and the contagion effect of if someone you know gets solar or an EV or Hybrid vehicle, you are more likely to purchase one being able to tangibly hear of the savings and impact.
Govt aside the ways of property holding up GDP are well gone and we are simply living out the aftermath of this, coupled with high energy prices. There are still plenty with cash to spend who will do so, but the middle is still getting squeezed and holding back.
"The real issue is to much non performing debt in businesses and in households" - and increasing the cost of debt will help?
OCR changes primarily pass through the floating rates. Fixed term rates are driven by wholesale swap rates.
Swap rates have been drifting higher without RBNZ intervention. An OCR hold, or even a cut won’t stop wholesale markets from sending fixed borrowing rates higher
Swap rates have been increasing in anticipation of the RBNZ increasing the OCR.
You can believe what you want to believe Jimbo
The primary mandate of the RBNZ is price stability, not curing peoples bad debts.
The mandate also mentions minimising unemployment. 4% isn't that terrible.
I find it weird that they didn't raise when fuel was going up, then did raise as it was coming down. They are meant to be preventing inflation, not reacting to it.
Or swap rates were increasing because the RBNZ failed to raise rates when they needed to, with inflation hitting the up side of the mandates band with a rising trend over 4 quarters. Late last year they cut but in my opinion should have been raising and we are still in catch up from that because the RBNZ is 6 months behind the market.
I agree, that last cut inparticular seemed crazy. They seem very reactionary. I reckon in 6 months inflation will be dead and the economy deader and they will cut again.
Indirectly yes, by disincentivising such debt
Exactly! As I’ve been saying on here for a long time that we kept creating more of the problem, to solve the existing problem - excessive debt relative to GDP (ie our productivity) every time a crisis arrived. It work for a while but it was never going to work forever - at some point it was going to backfire on us. Like a drunk taking a shot to avoid sobering up and facing reality - we just issued more mortgage debt to stimulate the economy when things got tough, instead of producing more things we could export to the world.
Some sectors are more in the crap than others. Builders cannot make money at today cost of land. Land holders are usually high net worth individuals, foreign and/or domestic, who can just sit on their hands and wait.
The "sitting on hands" mentality works until it doesn't. Case in point 1: Japan. Case in point 2: The CRE apocalypse in prime locations in the U.S. in the past 4 years.
And possibly coming to Aussie. Case in point 3: A tower in Little Collins Street has sold for less than half of its $83 million post-pandemic purchase price in a deal that is a brutal, razor-sharp haircut for the vendor (an unlisted Lendlease fund).
The 15-storey B-grade tower at 459 Little Collins Street is understood to have sold to a local private investor for just $36 million.
The buyer beat five other bidders to snare a bargain.
https://www.theage.com.au/business/companies/brutal-plunge-lendlease-fu…
Your point is sound though some of your evidence is overstated. For example youth unemployment was over 25% in the early 1990s. Its about 17% now. It might get there though.
I know I'm being a bit pedantic - I recall the state of our local CBD in the early 1990s and it had a lot more vacant store fronts than now. I think mortgagee sales were higher then too but I havent checked referencable sources.
Its happened before and it will again, trick is will we be grasshoppers or ants (from the fable).
"Areas of the economy where supply is constrained will always be exceptions..."
= Central & Local government monopoly bureacracies
‘we are nowhere near the sort of conditions where rate rises are requried to cool demand’
Unless of course we are in stagflation and that is what is needed even though that thought pattern would go against the past 3-4 decades of economic outcomes which now seems to be causing recency/confirmation bias issues.
We may need to raise rates even though it causes the economy to experience more pain - that is what stagflation is. We had the benefit for about 30-40 years of dropping rates to stimulate the economy anytime things got hard - but that may not work now - actually it could make things far worse.
The Fuel increases will leak into other areas of the economy and rises will tip into other sectors and inflationary rises will spread everywhere, like an uncontrolled cancer.
Which is why focusing just on the OCR rise as the answer isn't the answer. It takes 18months at least to have an effect. And it won't stop the price rises regardless.
The OCR or higher lending rates? They aren’t necessarily correlated. Lending rates go up/down based upon what wholesale rates are doing, not what deluded frame of mind the RBNZ are in. Eg like last 6 months or rising wholesale rates up 100bps in some instances with OCR more or less flat. Those wholesale rate risings have flowed through to lending rates regardless of what the action or inaction they RBNZ have decided.
Carry a big stick and speak softly. Pause at the next review.
Wait for the fruit and veg prices come summer. The level of increase in crop prices will be dependent on how much fert farmers have stockpiled over the year, and increases in price in this area take a season to flow through.
Mortgagee sales on TM up to up to 97. Probably nothing... Edit. That's 97 active at the moment. Many have already sold, more in the wings no doubt.
I'd say you're correct, it probably is nothing.
The GFC benchmark:
During the worst periods following the Global Financial Crisis (GFC), New Zealand regularly experienced over 2,500 mortgagee sales per year
.
There were
387 recorded mortgagee sales
across New Zealand in 2025.
There is no exact, official total for finalised foreclosure executions
for the elapsed portion of 2026 yet, as agencies like CoreLogic publish these figures retroactively.
However, looking at the active pipeline and point-in-time tracking, the data shows that the volume has hit a steady plateau
.
Key Tracking Metrics for 2026 so far:
Active Market Stock:
The number of active mortgagee listings on the market peaked around 109 to 119 properties
.
The Stability Trend:
Instead of continuing to climb exponentially, the weekly volume of newly advertised distressed properties has flattened out through the first half of 2026. This is heavily tied to retail mortgage rates dropping and stabilizing back into the mid-4% range.
The Mortgagees sales currently, hide a gigantic iceberg....
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