'Never Seen Anything Like It': Fuel Prices Rocket Upwards, Food Stays Flat

Friday, 15 May 2026, 3:49 pm
Article: RNZ

Gyles Beckford, Economics correspondent

• Inflation surge coming driven by fuel prices
• Petrol up a third, diesel nearly doubled in two months
• Energy and airfares also higher
• Food inflation takes a rest, flat for the month, annual rate lowest in a year
• Items make up just under half consumer price index

The price of fuel and transport has skyrocketed while food costs have held steady, in a partial inflation survey.

Stats NZ data confirmed steep price rises for petrol and diesel over the past couple of months as the Middle East conflict broke out, leading to the closing of the Strait of Hormuz.

"In the two months since February 2026, petrol has increased 33.6 percent and diesel has increased 94.9 percent," Stats NZ spokesperson Nicola Growden said.

The world oil benchmark Brent Crude has averaged more than US$100 (NZ$170) a barrel since the start of the conflict.

Domestic airfares increased 4.2 percent, and international airfares increased 6.2 percent in April on the previous month.

"Easter, school holidays, and Anzac Day fell in April this year," Growden said.

"Airfares reflect pricing set up to 12 months in advance, so movements can be influenced by a range of factors."

Annually, domestic airfares fell 6.9 percent, and international airfares fell 6.5 percent in the 12 months ended April.

'Off the scale' price rises sending people into debt

Infometrics chief executive Brad Olsen told Midday Report the fuel price rises were "off the scale".

"For the likes of diesel you've never seen anything like it, even for petrol things are bigger than they've ever been."

He said the speed of the price rises has caught many firms by surprise and they had no chance of catching up in recovering the higher prices, while it also meant households having to reorganise their budgets.

"What do you plan for, because that uncertainty in the market, and how quickly those prices have shot up are a real concern.. we'll be watching confidence and spending, how are people responding to this."

Waikato student nurse and mother-of-four Poihaere Whare told Midday Report financial pressure was hitting hard for students all over New Zealand.

"We have to do what we do to get by and that's including the bare necessities like food.

"I haven't had fresh fruit and vegetables for a wee while... I always put myself last."

She said every student was struggling differently and many had no choice but to get into Afterpay debt.

Whare said she tried to fill her car at times when it was cheaper, but did use Afterpay if she could not wait for those times.

"I'm a mum. I have to prioritise what's important at the moment."

She said her kura was offering her some support and many universities were offering hardship grants to students.

Food inflation falls

Offering some relief from fuel price rises were flat food prices for the month, and a slowdown in the annual food inflation rate.

Cheaper fruit and vegetables, notably kiwifruit and apples, along with legs of lamb offset slightly higher avocados, meat pies and chocolate blocks.

Annual food inflation slowed to 2.6 percent, the lowest rate since February 2025, with meat, coffee, and bread notable increases.

Electricity prices were the other significant price rise for the month, gaining 2.3 percent, taking the annual increase to 13.1 percent, while gas prices were up 10.4 percent for the year.

"Electricity prices have been increasing every month from December 2024," Growden said.

The items represented about half the consumer price index and back forecasts of an inflation spike caused by the conflict.

Cash rate rises coming

ASB senior economist Mark Smith estimated the inflation spike for prices was about 1.3 percent for the month, although the overall survey was a bit softer than he expected.

"What appears to be apparent, however, is that consumer caution and the subdued demand backdrop is having more of a moderating impact on inflation.

He was forecasting annual inflation to hit 4.3 percent in the June quarter from 3.1 percent in March, with the outlook uncertain as to how long it would stay high.

But Smith said it was a certainty the Reserve Bank (RBNZ) would raise the official cash rate (OCR).

"We expect the RBNZ to begin normalising monetary policy settings from July, with hikes in 25 basis point increments and the OCR ending the year at 3.25 percent."

"The timing is tricky, and the case can be made for an earlier (May) or later (September) start to OCR hikes."

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