New Zealanders Brace For Another Cost-Of-Living Hit

Just as household budgets were beginning to stabilise, new pressures are building. Inflation is forecast to rise in the short term, global uncertainty is growing, and purchasing power is under threat again.

That is the warning from Reserve Bank of New Zealand Chief Economist Paul Conway, speaking today at the Financial Advice New Zealand National Adviser Conference 2026 in Auckland.

Conway told conference goers that New Zealand households have been through a punishing few years and the road ahead remains difficult. Conflict in the Middle East is expected to push inflation higher in the short term, complicating the Reserve Bank's task of returning inflation to its 2% midpoint.

"We are picking our way through a more fragile and more dangerous global economy," Conway said. "For small economies like New Zealand, that means more shocks, more uncertainty and less room to absorb them."

The numbers already make uncomfortable reading. Prices are roughly 26% higher than they were in 2020. Everyday essentials including council rates, construction costs, food and insurance have risen sharply and are hard for households to avoid. New Zealand's prices sit above the OECD average in three quarters of measured product categories.

Wages have grown in nominal terms but real income growth has been weak and since 2022 New Zealand has been slipping behind the OECD average on purchasing power.

Conway was direct: the Reserve Bank can keep inflation in check, but it cannot lift living standards on its own. Productivity growth is the only sustainable path to higher purchasing power and New Zealand has been falling behind for years.

Financial Advice New Zealand chief executive Nick Hakes said the outlook reinforced the importance of sound financial advice.

"People are worried, and they have reason to be. Getting the basics right, spending, saving, protection, matters more when the margin for error is this thin. A financial adviser is best placed to navigate these volatile times."

About Financial Advice New Zealand: Financial Advice New Zealand is the largest financial adviser-representative professional body for Financial Advisers and Financial Advice Providers (FAPs) in New Zealand. Our members provide trusted advice to consumers across financial planning and investments, mortgages and lending, and life, disability & health insurance, which ultimately helps Kiwis grow, manage, and protect their wealth.

Today, Financial Advice New Zealand is a vibrant, innovative association, where the underlying driver of policy is that great advice transforms lives. We promote the highest professional standards for financial advice, so more New Zealanders have the confidence to actively seek quality financial advice to improve their financial health, wealth, and well-being.

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