Food prices in New Zealand rose 1.9 percent in the year to July 2026, the smallest annual increase since December 2024, according to selected price indexes released by Stats NZ this morning. Petrol prices fell 5.7 percent over the month and diesel fell 12.1 percent, the third monthly fall in a row for both fuels.
The numbers matter well beyond the supermarket trolley. July is the first month of the September 2026 quarter, and the September quarter is where the Reserve Bank has said it expects annual inflation to start coming back down. The Monetary Policy Committee next sets the official cash rate on 2 September, and this release is one of the last clean price readings it gets before then.
Selected price indexes are a monthly stocktake of the prices that move most often. They are not the full consumers price index, which comes out once a quarter, but they cover fuel, food, rent, power, gas, airfares, accommodation, alcohol and tobacco. Between them those items account for a large share of the swings in headline inflation, which is why economists read the monthly release closely even though it is only a slice of the basket.
The fuel numbers are the clearest sign that the shock which drove inflation up this year is unwinding. In the 12 months to July 2026, petrol was up 15.1 percent and diesel up 34.9 percent. Those are still large annual increases, but a month earlier the same measures were 23.6 percent for petrol and 57.1 percent for diesel. Most of that improvement came from prices actually falling in July rather than from a friendlier comparison with a year ago.
“Fuel prices decreased for a third consecutive month, following increases in March and April,” Stats NZ prices and deflators spokesperson Nicola Growden said. “The recent declines mean prices for petrol and diesel are now below levels recorded in March, although they remain higher than in February.”
That is the sequence the Reserve Bank was banking on. On 8 July the Monetary Policy Committee reached consensus to lift the official cash rate by 25 basis points to 2.50 percent, noting that following the partial reopening of the Strait of Hormuz, global oil prices had fallen markedly. The committee forecast that annual inflation would peak at 3.9 percent in the June quarter before easing to 3.3 percent in the September quarter. When the actual figure arrived on 21 July it was 4.1 percent, above the bank’s own pick, with petrol alone accounting for almost a quarter of it.
So the July fuel figures are doing the work the Reserve Bank needed them to do. The awkward part of the release is everything that is not imported.
Electricity prices were up 9.5 percent in the year to July and gas prices up 10.9 percent. Cigarettes and tobacco, where excise does most of the work, rose 5.8 percent. Restaurant meals and ready-to-eat food, which is largely wages, rent and power passed on at the till, rose 3.2 percent. None of those prices are set on a world commodity market. They are set here, by network charges, generator margins, tax settings and the cost of employing people, and they have kept climbing while the fuel line has fallen away.
That split is the whole argument in front of the Reserve Bank. Imported inflation is fading fast. Domestically generated inflation is not fading nearly as fast, and it is the part monetary policy is actually aimed at.
One domestic price has stopped moving almost entirely. Rents measured across all tenancies, what Stats NZ calls the stock measure, rose 0.1 percent over the year to July and fell 0.1 percent over the month. The flow measure, which captures what landlords are charging on new tenancies rather than existing ones, rose 0.8 percent over the year and fell 0.6 percent over the month. For a cost that takes a quarter or more of many household budgets, an annual increase of 0.1 percent is close to a standstill, and it is a meaningful improvement for renters whether or not it registers as news.
On food, the composition is as interesting as the headline. Restaurant meals and ready-to-eat food led the annual increase at 3.2 percent, followed by grocery food at 1.6 percent. Fruit and vegetable prices fell 1.0 percent over the year. Over the 12 months, standard two litre milk, dine-in lunches, takeaway coffee and white bread all cost more, while tomatoes and fresh eggs cost less.
Within the month, meat prices broke a long run. The meat, poultry and fish group fell 1.4 percent between June and July, and meat and poultry on its own fell 1.7 percent. “Meat and poultry prices recorded their largest monthly fall in more than five years, decreasing 1.7 percent in July,” Growden said. “The last time we saw a fall in prices of this size was in November 2020.” Fruit and vegetables went the other way, up 3.1 percent over the month, which is not unusual for the back half of winter.
The supplier side of the supermarket tells a similar story. The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index, published on 14 August, showed the list cost of grocery goods charged by suppliers rose 1.9 percent in July compared with a year earlier. “July’s result was the slowest annual increase since February 2025, driven by a number of cost decreases as some fuel adjustment factors reversed out, and as product cost increases haven’t been as intense as first feared when conflict in the Middle East sent various input costs soaring,” Infometrics principal economist Brad Olsen said. He added a warning that sits alongside the good news. “Caution remains for overarching input cost pressures, given freight costs have spiked in recent months, and uncertainty over the pathway for fuel prices.”
The one genuine jolt in the release was air travel. Domestic airfares rose 20.7 percent between June and July, the largest monthly increase in a July month since Stats NZ began collecting monthly domestic airfare prices in 2015. International airfares rose 10.9 percent over the month. Annually, domestic airfares were up 14.0 percent and international airfares up 3.5 percent. “Because many travellers book flights months before they travel, changes in airfares can reflect a range of market conditions over time,” Growden said. Domestic accommodation also rose 6.2 percent over the month while international accommodation fell 7.0 percent.
Put together, the July release describes an economy where the price of getting things moved is falling quickly, the price of feeding a household has almost stopped rising, and the price of keeping the lights on has not. Whether that is enough for the Reserve Bank depends on which half it weights more heavily on 2 September. Wage growth has not kept pace with any of it, with retail wages rising just 1 percent against annual inflation of 4.1 percent, so households are still catching up regardless of what happens to the cash rate.
The next selected price indexes, covering August 2026, are due on 18 September. For the longer view on how much of the pump price is actually tax, refining margin and crude, see our earlier look at the real price of petrol in New Zealand since 2004.
Are you noticing cheaper fuel and groceries in your own budget, or is the power bill cancelling it out? 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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