NZ CPI: Enough for more

Research evidence excerpt

NZ CPI: Enough for more

J P M O R G A N Economic Research

21 July 2026

NZ CPI was above expectations in 2Q, at +1.5%q/q (consensus: +1.4%, RBNZ/ Australian and New Zealand Interest

JPM: 1.3%). The annual rate jumped from 3.1%oya, to 4.1%. 2Q was expected to Rate Strategy

mark the local peak in inflation on pass-through of higher fuel and related impulses Ben K Jarman

to the goods channels, and though goods/tradables drove the upside surprise, this (61-2) 9003-7982

didn't come from the most obvious oil-linked items. Measures of trimmed mean ben.k.jarman@jpmorgan.com

and breadth firmed, which suggests a more fundamental impulse from pricing J.P. Morgan Securities Australia Limited

behaviour, as seen in recent business survey intentions (charts). It also confirms

some of the output gap signal from upward GDP surprises/revisions, that there is

less space for policy gradualism than commonly assumed.

We have expected the RBNZ to get back to neutral quite briskly, and after

delivering a first hike, the bank appears on track to go again next meeting, per our

forecast (cumulative four hikes to 1Q27). Lower average levels of oil prices have

restored momentum to the business survey growth correlates after a wobble earlier

in the year, keeping the recovery on a decent footing. The RBNZ framed their first

hike a couple of weeks ago as a step in removing accommodation, which sets a low

bar to tightening further through 2H26.

On the quarter, tradables inflation was significantly stronger (+2.7%q/q, 4.9%oya)

reflecting a jump in fuel prices (private transport supplies/services: +13.0%q/q),

and some household goods groups with potential pass-through from higher input/

transportation costs (clothing/footwear: +1.3%q/q, appliances: +1.7%q/q, tools/

equipment: +2.5%q/q).