“Over 2026, we expect inflation to increase significantly and uncomfortably.”
ANZ senior economist Miles Workman is also picking a 2.9% annual figure.
“That’s slightly higher than our previous forecast of 2.8% but slightly lower than the RBNZ’s April MPR forecast of 3%,” he said.
“Given developments over the past couple of months, these data have a historical feel, with inflation set to accelerate sharply in [the second quarter].”
That was not to say the signal, from the core inflation measures in particular, didn’t matter, he said.
“While it is too soon to expect core inflation to reflect any broadening in inflation pressures stemming from the oil shock, the RBNZ would be particularly concerned if these measures were to show signs that they were lifting ahead of that shock.”
Westpac senior economist Satish Ranchhod is picking a fall to an annual rate of 2.8%, although he also warned that the rate would soar above 4% later this year.
“This will be just a temporary reprieve,” he said. “Oil prices spiked higher in late February. And despite their recent easing, they remain uncomfortably high.”
While the early impacts of those increases would be seen in the March quarter report, their full impact, including the spillover into other prices, wouldn’t be evident for a few months.
“As the impact of those costs and the related supply chain disruptions ripples through the economy, we expect inflation will rise significantly higher through the middle part of the year,” he said.
“We’re picking a peak of 4.3%.”
KiwiBank and BNZ economists were less confident the topline number had eased.
BNZ head of research Stephen Toplis picked a small dip to an annual rate of 3%.
“We continue to believe headline inflation peaks at an annual 4.5% in [the second quarter],” he said.
“We forecast headline inflation to remain outside the Reserve Bank’s target band until mid-2027 at the earliest.”
Kiwibank economist Alexandra Turcu picked a flat result with annual inflation unmoved at 3.1%.
“We hoped that 2026 would finally be the year where growth caught up with prices,” said Turcu.
“Now, we are less optimistic. We are currently weathering one of the biggest oil shocks in history, and a weak consumer is our biggest concern.”
Liam Dann is business editor-at-large for the New Zealand Herald. He is a senior writer and columnist, and also presents and produces videos and podcasts. He joined the Herald in 2003.Stay ahead with the latest market moves, corporate updates, and economic insights by subscribing to our Business newsletter – your essential weekly round-up of all the business news you need.