WEEKLY ECONOMIC COMMENTARY · Resilient activity and simmering inflation

Key arguments

• NZ activity resilient: filled jobs +0.9% y/y; agriculture drives growth in Canterbury (+1.9%), Otago (+1.5%), Southland (+3.1%), while Auckland (+0.6%) and Wellington (+0.4%) lag.
• Inflation pressure is concentrated in rate-insensitive parts of the economy; non-food/fuel inflation was 2.9% in June and has run near or above 3% for five years.
• Westpac forecasts a 25bp RBNZ hike in December 2026 and an OCR peak of 4% next year; inflation above 3% until at least mid-2027.
• NZD trade-weighted down ~4% since early September, ~4% below the RBNZ's September MPS assumption; NZD/AUD rose to 0.8110 then expected to rise as OCR increases.

Corresponding source evidence

1. 1 Westpac New Zealand Economics Resilient activity and simmering inflation While bumpy and uneven, New Zealand’s economic recovery has continued over the past few months, with activity showing resilience in the face of continued global headwinds.
2. The average price of 91 unleaded has risen by nearly 50 c/litre – albeit late in the month and likely not fully reflected in surveyed confidence – taking it back to the levels seen during the early stages of the Middle East conflict.
3. Inflation expectations were steady in September’s household and business surveys.