Half of New Zealand firms plan to raise prices next quarter

The headline number understates the speed

Stats NZ reported annual CPI of 4.1% for the June 2026 quarter, the highest reading since December 2023 and well clear of the Reserve Bank’s 1-3% target band. That is a one-percentage-point jump from the 3.1% recorded in March. But the annual figure is a rear-view mirror. The June quarter alone came in at 1.5%, the sharpest quarterly rise since September 2023.

Writing for Stuff, Damien Grant makes the point that matters most: the four quarterly readings into June ran 1.0%, 0.6%, 0.9% and 1.5%. That is not a plateau, it is an acceleration, and the most recent quarter annualises to roughly 6%. The disinflation trend that ran for two years off the post-pandemic peak has not slowed. It has reversed.

Fuel is the trigger, not the whole story

The proximate cause is a spike in global petrochemical prices tied to Middle East tensions. Petrol rose 27.5% over the year and diesel rose 71%, together accounting for almost two-thirds of the quarterly increase. Strip fuel out and annual CPI would have been 2.9%, comfortably inside the band. That is the basis for the Reserve Bank’s argument that this is a first-round shock it can look through.

The trouble is the domestic side is not cooperating. Non-tradeable inflation held at 3.4% annually, barely below the 3.5% in March and still above target. The drivers are the costs businesses cannot dodge: electricity up 12%, local authority rates up 8.8%, and health insurance premiums up 19.2%. Crucially, more than 80% of goods and services in the CPI basket rose in price over the year. This is broad, not narrow.

What businesses are already telling the surveys

The number every owner should read is buried in the NZIER Quarterly Survey of Business Opinion. Westpac’s analysis shows a net 41% of firms raised prices in the June quarter, up from 22%, the highest since September 2023. Forward intentions are worse: a net 54% intend to raise prices in the next three months, the strongest pricing intention since March 2023.

That matters because the fuel pass-through is not finished. Shaw and Partners director Andrew Kelleher noted that many businesses are still absorbing fuel costs rather than charging for them, with building-related pricing having moved furthest so far. Diesel is up 71%. Every firm that uses transport, logistics or construction inputs has swallowed a cost shock, and the question is not whether they pass it on but when. The survey says the when is now.

The second-round risk the Reserve Bank is watching

RBNZ Chief Economist Paul Conway has drawn the theoretical line: “Monetary policy cannot soften the direct hit to real incomes from higher global petrochemical prices,” he said. The Bank’s job is to stop that first-round shock becoming a wage-price spiral. The whole look-through strategy assumes wages and other prices do not chase fuel higher.

A net 54% price-rise intention is precisely the signal that assumption is under strain. The 4.1% result also beat the Reserve Bank’s own 3.9% forecast. Westpac notes that “the easing in domestic inflation looks like it has flattened off in recent quarters” and is now forecasting 25bp OCR hikes at the September and December meetings, with an October move flagged as possible. Businesses banking on rate cuts should reprice that expectation too.

Don’t set 2026 numbers on a 2024 assumption

The practical takeaway is blunt. If you are negotiating a wage round, renewing a supplier contract, resetting a lease or pricing a product on the belief that inflation was solved in 2024-2025, the data says you are behind the curve. Borrowing costs may rise rather than fall. Input costs from firms still to pass through fuel are coming. And with central and local government charges up 8.3% annually, the domestic squeeze is structural, not a one-off. Inflation is live again. Price accordingly.

Sources

• Annual inflation at 4.1 percent in June 2026 (2026-07)
• Inflation rises to highest level in two years (2026-07-21)
• Inflation rate tops 4% – worst in more than two years (2026-07-21)
• Five takeaways from today’s 4.1 percent inflation figure (2026-07-21)
• Tradies are passing on the fuel shock first as inflation climbs to 4.1 percent (2026-07-21)
• Like an accelerating e-scooter, NZ’s inflation is moving faster than you think (2026-08-02)
• First Impressions: NZIER Quarterly Survey of Business Opinion, June quarter 2026 (2026-07)
• Inflation back at a two-year high, upside risks building (2026-07-27)