Petrol costs help drive inflation to highest level in two years

Author: Liam Dann,
Publish Date: Tue, 21 Jul 2026, 10:59am

New Zealand’s annual inflation rate has hit its highest level in more than two years on rising fuel prices.

The consumers price index (CPI) increased 4.1% in the 12 months to the June 2026 quarter, according to figures released by Stats NZ today.

The 4.1% increase follows a 3.1% increase in the 12 months to the March 2026 quarter. The Reserve Bank of New Zealand’s target band for the annual inflation rate is 1 to 3%.

Unsurprisingly, the largest upwards contributor to the annual inflation rate was petrol, up 27.5%.

“Higher petrol prices accounted for almost a quarter of the 4.1 percent annual increase,” prices and deflators spokesperson Nicola Growden said.

Economists had largely anticipated the rise, although it is higher than the 3.9% forecast by the Reserve Bank.

Other contributors to the annual CPI increase were:

electricity – up 12% (8.4% contribution to the 4.1% annual inflation rate)
local authority rates and payments – up 8.8% (6.7% contribution)
construction of new housing – up 2.7% (6.4% contribution).

The CPI rose 1.5% in the June 2026 quarter, compared with the March 2026 quarter.

Higher petrol prices were the largest contributor to the quarterly inflation rate, up 20.1%. Diesel prices also increased, up 47.7%.

“Together, petrol and diesel accounted for almost two-thirds of the 1.5% quarterly increase,” Growden said.

Excluding the effect of petrol and diesel, the CPI rose 0.5% in the June 2026 quarter.

Tradeable inflation measures final goods and services that are influenced by foreign markets.

Within the 4.9% increase in tradeable inflation in the 12 months to the June 2026 quarter, higher prices were recorded for:

petrol, up 27.5% (46.4% contribution to the 4.9% rise for all groups tradeable)
other vehicle fuels and lubricants, up 71% (15.1%) contribution to all groups tradeable).

Lower prices were recorded for:

oils and fats, down 9.1% (-1.7% contribution to all groups tradeable)
audio-visual equipment, down 18.4% (-1.4% contribution to all groups tradeable).

Non-tradeable inflation measures final goods and services that do not face foreign competition and is an indicator of domestic demand and supply conditions. However, the inputs of these goods and services can be influenced by foreign competition.

Within the 3.4% increase in non-tradeable inflation in the 12 months to the June 2026 quarter, higher prices were recorded for:

electricity, up 12% (17% contribution to the 3.4% rise for all groups non-tradeable)
local authority rates, up 8.8% (13.6% contribution to all groups non-tradeable).

Lower prices were recorded for:

milk, cheese, and eggs, down 9% (-1.7% contribution to all groups non-tradeable)
real estate services, down 4.6% (-1.5% contribution to all groups non-tradeable).

Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.