The typical New Zealand pay packet grew over the past year. It just did not grow as fast as the cost of the things it buys.
Figures Stats NZ published on 26 August show median weekly earnings from wages and salaries were $1,419 in the June 2026 quarter, up $38 or 2.8 percent on the same quarter a year earlier. Median hourly earnings rose 96 cents, or 2.7 percent, to $35.96. The numbers come from the annual income run of the Household Labour Force Survey, released as Labour market statistics (income), June 2026 quarter.
Over the same 12 months the consumers price index rose 4.1 percent. Put the two together and the median hourly wage bought about 1.3 percent less in the June 2026 quarter than it did a year before.
The broader measure did worse. Median weekly income from all sources, which adds self-employment, government transfers and ACC to wages and salaries, was $962, against $959 a year earlier. That is a gain of $3 a week, or 0.3 percent, set against price rises of 4.1 percent. In real terms it is a fall of roughly 3.6 percent.
Where the price rises came from
The consumers price index for the June 2026 quarter shows the increase was concentrated in a short list of items. Petrol rose 27.5 percent over the year and accounted for 23.5 percent of the whole 4.1 percent rise. Other vehicle fuels and lubricants, the category that carries diesel, rose 71.0 percent. Electricity was up 12.0 percent and local authority rates up 8.8 percent.
Take out food, household energy and vehicle fuels and the rest of the basket rose 2.5 percent, which sits inside the Reserve Bank’s 1 to 3 percent target band. Almost the entire gap between a 2.8 percent pay rise and a 4.1 percent price rise is energy and the goods that energy moves.
The Reserve Bank named the cause when it lifted the Official Cash Rate to 2.75 percent on 2 September. In its September Monetary Policy Statement the bank said inflation “rose to 4.1% in the June 2026 quarter as fuel prices increased due to conflict in the Middle East”, and added that “Higher fuel prices have left households with less money to spend on other goods and services.” It expects inflation “to remain above 3% for the remainder of 2026” and warned it “may need to increase the OCR further this year”.
Who felt it hardest
The CPI is a single national number. Stats NZ also publishes a second set of inflation measures, the household living-costs price indexes, which track 13 different kinds of household separately. Those numbers spread out a long way.
For the year to the June 2026 quarter, living costs rose 3.2 percent for the average household. For the lowest-spending fifth of households they rose 4.3 percent. For the highest-spending fifth they rose 1.9 percent. Superannuitant households recorded 4.5 percent, the steepest of any group in the release, and beneficiary households 3.7 percent. The lowest-spending fifth faced more than twice the rate of the highest-spending fifth.
Most of that spread comes down to one line in the accounts. The two indexes treat housing differently, and as Stats NZ puts it, “the CPI captures the cost of building a new home, while the HLPIs capture mortgage interest payments”. Interest payments fell 15.4 percent for the average household over the year, the delayed benefit of the rate cuts the Reserve Bank delivered before it changed direction this month.
Who got the mortgage relief
A cut to mortgage rates only helps a household that has a mortgage, and Stats NZ’s own weighting data, published alongside the indexes and drawn from its 2024 household spending figures, shows how unevenly that lands.
Interest payments make up 12.0 percent of spending for the highest-spending fifth of households, about $334.69 a week. For the lowest-spending fifth they are 2.3 percent, about $11.09 a week. For superannuitant households they are 1.2 percent, about $9.18 a week. The ownership figures behind those weights say the same thing. Some 57.2 percent of the highest-spending fifth own a home with a mortgage still on it, against 13.1 percent of the lowest-spending fifth and 8.5 percent of superannuitant households, most of whom own outright.
The items that rose fastest run in the opposite direction. Electricity is 6.9 percent of spending for the lowest-spending fifth and 1.9 percent for the highest. Local authority rates are 8.1 percent against 3.0 percent. Food is 22.1 percent against 15.3 percent. Superannuitant households put 8.3 percent of their spending into rates and 4.7 percent into electricity, both well above the national averages of 4.4 and 3.7 percent.
So the households with almost no exposure to falling interest costs carry the heaviest exposure to the prices that climbed. That is the 1.9 percent against 4.3 percent gap explained, and it is why the same year can be described accurately as either mild or painful depending on which household you ask.
What the earnings figures hide
There is an oddity inside the earnings numbers worth flagging. Full-time median hourly earnings rose 3.9 percent to $38.00 and part-time hourly earnings rose 3.6 percent to $28.49, yet the combined median rose only 2.7 percent. Both parts moved faster than the whole. That can happen with medians when the mix of jobs shifts, because a larger share of lower-paid part-time work drags the combined middle down even while each group’s own middle rises. Stats NZ does not attribute the movement in the release, and it cautions that the survey covers a sample rather than every person, so a degree of uncertainty attaches to every estimate.
Self-employment was the one income source that kept up. Median weekly income from self-employment was $959, against $921 a year earlier, a rise of about 4.1 percent. Median weekly income from government transfers, which covers New Zealand Superannuation, the Veteran’s Pension, Student Allowance and payments from Work and Income and Inland Revenue, was $486, up $15 or 3.1 percent. That is below the 4.5 percent living-cost rise recorded for superannuitant households.
One number in the release moved the right way over a longer view. The gender pay gap, measured on median hourly earnings, was 5.3 percent in the June 2026 quarter against 5.2 percent a year earlier, but well down on the 8.2 percent recorded in the June 2024 quarter. Stats NZ puts a sampling error of about 1.7 percentage points on the current figure, meaning the true gap most likely sits somewhere between 3.6 and 7.1 percent.
None of this is settled. The Reserve Bank has started pushing the cash rate back up, which will slowly reverse the 15.4 percent fall in interest payments that has been holding living costs down for mortgaged households. If fuel prices ease while mortgage costs rise, the pattern of the past year could invert, and the households that have had the easiest 12 months would be the ones facing the tighter one. The next reading on household living costs, for the September 2026 quarter, is due on 30 October.
Has your pay kept up with your bills over the past year, and which line on your household budget moved the most? 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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