New Zealand inflation spikes to two-year high as fuel prices surge amid Middle East conflict

Consumer price inflation in New Zealand is projected to rise 1.5% in the June quarter, lifting the annual CPI to about 4.1%, the highest level in two years. The jump is driven primarily by a sharp increase in fuel costs linked to the war in the Middle East, with petrol prices up roughly 20% and diesel up about 51% over the quarter. Energy components such as electricity (+4% q/q, +12% y/y) and gas (+2% q/q, +11% y/y) also added to price pressure, while food prices rose 0.4%.

Core inflation remains above the Reserve Bank of New Zealand’s 2% target midpoint, even as overall economic growth slows and the labour market softens. Analysts expect the official CPI report on 21 July to confirm these trends, aligning closely with the RBNZ’s own forecast of around 3.9% annual inflation.