New Zealand businesses paid 2.9 percent more for the things they buy in the June quarter and managed to lift their own prices by only 1.6 percent, a gap of 1.3 percentage points that is more than twice as wide as the one recorded three months earlier.
The numbers come from the business price indexes released by Statistics New Zealand on Wednesday. The producers price index tracks two things side by side. Inputs are what firms pay for fuel, power, freight, materials and services. Outputs are what they receive for whatever they sell. When inputs run ahead of outputs, the difference comes out of margin.
Stats NZ prices and deflators spokesperson Nicola Growden said in the release that “in the June 2026 quarter, prices paid by producers for inputs like fuel, power, and raw materials rose faster than prices received for the goods and services they produced”.
This is the second quarter running that inputs have outpaced outputs, and the gap has widened sharply. In the March quarter inputs rose 1.4 percent against outputs of 0.8 percent, a difference of six tenths of a percentage point. In the June quarter the difference was 1.3 points. Over the full year to June, inputs were up 4.1 percent and outputs up 3.2 percent.
Almost all of the quarterly move traces back to two things, energy and moving goods around. The biggest contributors to rising input costs were rail, water, air and other transport, up 15.6 percent, road transport, up 12.2 percent, and electricity and gas supply, up 9.8 percent.
Fuel did the heavy lifting inside those numbers. Diesel bought as a business input rose 52.6 percent in the quarter, petrol rose 20.0 percent and other petroleum products rose 34.9 percent. That is the June quarter, which captured the worst of the fuel spike that followed the closure of the Strait of Hormuz to commercial shipping in late February. Pump prices have since come off their April peak but remain well above where they started the year, as our weekly fuel price tracker shows.
The single most striking figure in the release has nothing to do with oil. Electricity sold to businesses rose 21.8 percent in the June quarter. Electricity sold to households rose 4.4 percent over the same three months. Firms on commercial supply contracts absorbed close to five times the increase that residential customers saw, in one quarter, from the same generators drawing on the same lakes and the same gas.
That split matters because household power bills get the political attention while commercial contracts get repriced quietly. The Electricity Authority reported on 12 August that power bills across households and small businesses rose 6.8 percent on average in the first half of 2026, with lines charges accounting for 54 percent of the increase. Among consumers who saw any change at all, household bills rose 8.7 percent and small business bills rose 7.2 percent, while 22 percent of households and 34 percent of small businesses saw no change. Those are retail bills for small connections. The producers price index is picking up something much larger further up the chain.
On the output side, the industries recording the biggest price rises were electricity and gas supply, up 11.0 percent, road transport, up 8.4 percent, and dairy product manufacturing, up 3.9 percent. Read the two lists together and a pattern appears. Energy and transport show up at the top of both. They are paying more and charging more. Everyone downstream of them is paying more and, on the evidence of a 1.6 percent output result, not charging much more at all.
It is worth being clear about what is not causing this. Salary and wage rates rose 0.6 percent in the June quarter and 2.0 percent over the year, less than half the annual rise in input prices. Labour is currently the cheapest major input a New Zealand business has, in the sense that it is the one rising slowest. The squeeze in these figures is an energy and freight story, not a wages story.
Farmers came off worst. The farm expenses price index rose 3.8 percent in the June quarter and 8.0 percent over the year, twice the rate of general business input costs. Fuel, fertiliser and livestock purchases were the largest contributors. Fertiliser is itself downstream of gas and freight, so a farm buying urea and diesel in the same month was hit twice by the same shock.
The cost of expanding also went up, though more modestly. The capital goods price index, which covers buildings, plant, machinery and vehicles bought by producers, rose 1.8 percent in the quarter and 3.2 percent over the year. That sits on top of a June quarter in which a great many firms had less margin than they expected to fund any of it.
The comparison that will interest anyone watching interest rates is the one with consumer prices. The consumers price index rose 1.5 percent in the June quarter and 4.1 percent over the year, driven heavily by petrol. Household inflation ran at roughly half the quarterly pace of business input costs. Businesses wore the difference rather than passing it through at the till.
Whether they can keep doing that is the open question. A firm can absorb one quarter of cost inflation out of margin. Two or three quarters and the choice becomes raising prices, cutting hours or cutting the investment measured in that capital goods index. The September quarter figures will show which of those New Zealand businesses picked, and fuel and electricity prices between July and September will largely decide how hard the choice was.
One caveat on the data itself. Stats NZ recorded an overall response rate of 93.0 percent for the June quarter against a target of 96 percent, though the response rate for key firms was 99.3 percent against a target of 100 percent. The agency publishes the shortfall alongside the figures rather than burying it, and the headline movements are large enough that a three point gap in response is unlikely to change the story.
The next set of business price indexes, covering the September 2026 quarter, is due on 18 November.
Are you seeing these cost rises in your own business, and have you been able to pass any of them on? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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