New Zealand's inflation rate has climbed above the Reserve Bank's target band for the first time in more than two years, with soaring petrol and diesel prices responsible for most of the rise.

Stats NZ today confirmed the Consumers Price Index (CPI) increased 4.1 per cent in the 12 months to the June 2026 quarter, up from 3.1 per cent in the March quarter and well above the Reserve Bank of New Zealand's target range of one to three per cent.

The biggest culprit was fuel prices.

Petrol prices rose 27.5 per cent over the past year, making it the single largest contributor to inflation. Diesel prices climbed an even steeper 71.0 per cent, adding further pressure to businesses that rely on commercial transport.

According to Stats NZ, petrol alone accounted for almost a quarter of the annual inflation increase.

"Higher petrol prices accounted for almost a quarter of the 4.1 per cent annual increase," said Stats NZ prices and deflators spokesperson Nicola Growden.

The figures highlight just how much higher fuel prices have affected the wider economy. Stats NZ said annual inflation would have been 2.9 per cent if petrol and diesel prices had remained unchanged, keeping it within the Reserve Bank's target range.

Economists had largely expected inflation to rise, though the 4.1 per cent result was slightly higher than the Reserve Bank's 3.9 per cent forecast.

Most still expect the Reserve Bank to resume Official Cash Rate increases later this year if inflation remains above its target range.

While diesel prices rose much faster than petrol, the impact on household inflation was smaller because New Zealanders spend around eight times more on petrol than diesel.

Finance Minister Nicola Willis echoed Stats NZ’s comments about higher petrol and diesel prices driving inflation.

“New Zealanders have already experienced this at the pump and we know it’s been a very difficult period for many,” said Mrs Willis

“Donald Trump has made things harder.

“The cause of this high inflation in the quarter just released is the international oil shock. That is what has caused this inflation.

“What the data shows, in the absence of that petrol and diesel shock, inflation would be in target right now.”

Recent escalations in the Middle East have seen oil prices begin to rise again. Last week, experts warned fuel prices may have bottomed out while warning increases may loom. The AA also warned they expected to see prices rise this week.

Fuel dominates quarterly inflation

Fuel prices also drove inflation over the three months to June.

The CPI rose 1.5 per cent during the quarter, with petrol prices jumping 20.1 per cent and diesel increasing 47.7 per cent.

Together, petrol and diesel accounted for almost two-thirds of the quarterly increase.

Without the impact of fuel prices, quarterly inflation would have been just 0.5 per cent.

Petrol and diesel prices surged in April following global oil market disruptions before easing slightly in May and June, though they remained well above earlier levels.

Rising costs spread beyond the pump

Higher transport costs are also flowing through the wider economy.

Stats NZ said builders reported higher fuel costs as one of the reasons new housing construction prices increased 2.7 per cent annually and 1.6 per cent over the quarter.

Electricity prices climbed 12.0 per cent over the year, while local authority rates increased 8.8 per cent, contributing further to cost-of-living pressures.

More than 80 per cent of the goods and services measured by the CPI increased in price over the past year, underlining how widespread inflation remains despite fuel being the primary driver.

Soaring fuel prices push inflation above 4% - worst in over 2 years

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