High fuel prices continue to weigh on New Zealand households, but underlying inflation trends suggest the economy is in a stronger position than headline figures indicate, according to Retail NZ. 

New Zealand’s annual inflation rate reached 4.1 per cent in the year to June, with fuel remaining the biggest contributor to price growth, according to the latest Consumer Price Index data released by Stats NZ.

Retail NZ CEO Carolyn Young said petrol accounted for almost a quarter of the annual increase in inflation, while diesel was the second-largest contributor.

“All New Zealanders have been feeling the impacts of high fuel prices, so it is no wonder that petrol and diesel were the main cause of the inflation increase for the year to June,” Young said.

Fuel prices also drove much of the quarterly inflation increase, accounting for around two-thirds of the 1.5 per cent rise in the June quarter, which marked the fourth-largest quarterly increase since June 2022.

Despite the headline inflation figures, Young said the broader outlook for retailers was more encouraging.

“But if you look beyond the high fuel and power prices, the rest of the products in the CPI basket are actually tracking within the inflation target range of 1-3 per cent for the year,” Young said. 

She added that underlying inflation suggests the economy remains resilient, offering retailers confidence that trading conditions could improve if they can navigate the winter months and ongoing market uncertainty.

Young also noted that although geopolitical tensions in the Middle East have escalated, fuel prices have not surged to the levels seen when the conflict first intensified, providing additional relief for both retailers and consumers.

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