The Consumers Price Index (CPI) increased 1.5% in the June quarter, with petrol and diesel making up two-thirds of the quarterly rise.

The inflation rate of 4.1%, up from 3.1% at the end of the March quarter, was above the Reserve Bank of NZ’s (RBNZ) forecast of 3.9% and the highest since 4.7% at the end of the December quarter in 2023.

Inflation peaked at 7.3% in June 2022 and fell as low as 2.2% in September 2024.

The NZ dollar strengthened slightly against the American greenback, rising from US58.29c to 58.73c.

Greg Smith, investment specialist with Generate, said the wildcard was the uncertainty over the outlook for oil prices.

“We saw oil prices come down in May, June and into July and then started picking up as the ceasefire in the Middle East was close to collapsing. Every time there’s a flare-up over there, it filters through to the petrol pump a few weeks later.

“It makes setting interest rates more complicated. This is not a typical inflation story because there’s so much uncertainty in the global oil market,” Smith said.

“The Reserve Bank indicated it is prepared to look through the oil-driven inflation shock. The broader economy is not overheating, and it’s now a question of how long the central bank is prepared to put up with the (oil price) uncertainty.

“The market is pricing in a 96% chance of an official cash rate hike in September,” he said.

Sunny Nguyen, an economist with Moody’s Analytics, said NZ inflation was overwhelmingly an imported-energy story – tradable inflation nearly doubled to 4.9%, and stripping fuel out left a 0.5% quarterly rise and a 2.9% annual rate, back inside the target band.

“Beneath the spike, the domestic picture is more encouraging than the headline suggests. Non-tradable inflation eased to 3.4%, and core measures excluding food and energy held at 2.5%, showing little sign that the fuel shock is bleeding into other prices.

“The persistent pressures are concentrated in administered prices, electricity and council rates, which grind higher regardless of demand,” Nguyen said.

Local stocks

Market leader Fisher \& Paykel Healthcare was down 59c to $39.11; Ebos Group declined 38c to $22.10; Chorus decreased 17c to $9.62; Freightways eased 23c to $13.79; and a2 Milk shed 15c or 1.75% to $8.42.

Smith said a2 Milk had resolved its supply issues to China, but it was out of the market for three months and there was still a question of how much it had to spend on marketing to regain lost sales.

Other decliners were Third Age Health down 10c or 2.17% to $4.50; Serko decreasing 5c or 3.73% to $1.29; and Hallenstein Glasson shedding 18c to $10.22.

Infratil gained 33c or 2.18% to $15.47; Gentrack increased 10c or 2.74% to $3.75; Green Cross Health collected 3.5c or 1.79% to $1.99; and Eroad improved 3c or 3.03% to $1.02.

The property sector was stronger. Argosy increased 3c or 2.83% to $1.09; Kiwi gained 1.5c to 98c; Investore added 2c or 1.87% to $1.09; and Precinct added 1.5c to $1.10.

Contact Energy was up 5c to $9.25 after reporting steady electricity and gas sales of 495GWh in June compared with 410GWh for the same month last year. On July 16, South Island controlled storage was 145% of the mean and North Island 123%.

Smith said the lakes were brimming, wholesale electricity prices had fallen from $78MWh to $46MWh, and household bills were still rising – there was some disconnect there.

“You have to wonder whether the generators will face too much supply and when this will flow through to lower electricity prices (for households).”

AFT Pharmaceuticals, up 1c to $3.94, told the market that the US Food and Drug Administration has issued tentative approval for Scomara cream to treat Facial Angiofibromas in Tuberous Sclerosis.

AFT said the launch would be delayed until at least March 2029, but the tentative approval was a catalyst to develop new markets for the medicine outside the US.

Private Land and Property Fund gained 3.8c or 2.99% to $1.30 after the value of three vineyards in Hawke’s Bay decreased by $3.87m, reducing the unit price value to $1.274, from $1.298.

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