July 20, 2026 • 7 mins
An independent economist comments on New Zealand’s annual inflation rate hitting its highest level in more than two years on rising fuel prices. The consumer price index (CPI) increased 4.1% in the 12 months to the June 2026 quarter. The 4.1% increase follows a 3.1% increase in the March quarter. The largest upward contributor to the annual inflation rate was petrol, up 27.5%.
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Speaker 1 (00:00):
Today's big news story is the inflation rate. Let's run
the ruler over the numbers with independent economists Cameron bagriy.
It's gone up from three point one percent in the
twelve months to March up to four point one percent
in the twelve months to June. Now the Reserve Bank
was forecasting three point nine percent. Cameron Bagri were you
(00:22):
surprised by these numbers or pretty much in line with expectations?
Speaker 2 (00:27):
I think brought in line with sort of the expectations
of obviously we're seeing feel prices yet back we had
a little bit and obviously you dup down. Now they're
back up. But if you strip out food and energy
and look at what's called core inflation, Look core inflation
in your gum, there's running around two and a half percent,
and that's the key number for the Reserve Bank. And
(00:49):
unfortunately they've got a target of two percent. It's two
point five. There's not exactly what you call two. So
they're going to be a little bit weary in regard
to what we call the flow and effect of your
higher fuel prices, higher third prices with that start to
feed into what's called core inflation. And yes, I don't
want to see core inflation at two point five? Do
(01:11):
you want that number closer to two percent? So, yes,
the headline number was a little bit stronger and expected,
but let's look beyond that and look at the core numbers.
And the core numbers they're just sitting a little bit
too elevated at the moment.
Speaker 1 (01:23):
Yeah, obviously these numbers were driven up by petrol and
the quarter up twenty seven point five percent. Is it
inevitable that the next time the Reserve Bank has a
look at the oci they lifted again. Or are they
worried that the economy is not in great shape to
take higher interest rates?
Speaker 2 (01:42):
Oh? Yes, you could slice and dice things a couple
of ways if you look at the inflation numbers themselves.
And I'm not talking about headline inflation because you've got
to lock a few fuel prices because the Reserve Bank
can't control that, but the fact that core inflation is
still around two point five the Reserve bank, but look,
you've probably got the ash I have a little too light.
(02:03):
But the other sort of the equation charmian is that look,
the only is actually firmer. Okay. The traditional sort of
model of selling well expense the houses to each other.
That's not working to Auckland WN and Bay twenty, those
places are down on the dumps. But you get the
regions and my god, there's a bit of economic strength
that's coming through. So you have a strengthening economy and
(02:23):
you've got an official cash rate that's still a two
point five percent. Now you're probably a little bit too light.
So this is the unfortunates of a parody in regard
to economics. But sometimes good news becomes bad because the
good news is the rural regions again bloody well. So
when the rural regions are starting real well, it's going
to flow out of the citizen goos and we know
that it's starting to take place, So the official cash
(02:45):
rate doesn't need to be as light. And we're not
talking about the Reserve Bank jumping on the brakes share
they're taking the foot of the accelerator. If they take
the official cash rate and say two point five percent
to three percent in the next six months, it's not
not exactly a bag in store. It's what for the
normalization story.
Speaker 1 (03:02):
The exchange rate at the moment against the US dollar
fifty eight sense, that's pretty export friendly for US isn't it, Cameron,
What sort of effect would these inflation numbers have on
that number?
Speaker 2 (03:15):
Oh, these numbers at the March and we're probably a
little bit stronger than expected. So the cancy is locked
a little bit up. But the cancers are two sides
of coins. And what we're seeing was it in the
United States. You have moved with the currency in the
past little week. It's been that US inflation numbers actually
came through a little bit lower and expected, so a
little bit less expectation in the US Federal Reserve is
(03:37):
going to be heightened interest rates, which has been US
dollar negative. If that's negative, then the MUSEEU and US
dollar tends to go a little bit up. Now, my
personal view is that they're still an inflation uncurrent in
the United States, and so I still think the United States,
the US dollar is going to be sort of capped,
and that's sub sixty cent sort of arrange, which is
what we call the export friend design, and I think
(04:00):
we can look forward to that for another sort of
yeah twelve months, which adds a little bit of sort
of prime on the top. In regard to the commodity
prices still look pretty robust, like our dairy prices of
the dawn, but beef prices are dull, looking pretty good.
There's still a fair bit of money that's in there
for the rule sector. When you look at things once again,
it's a rural export letter revival. What we're seeing a
(04:21):
crossings on and that lower New Zeale doll. And it's
not just the king US dollar. It's a curiosity boy.
But the curiosity doll is around eighty three cents.
Speaker 1 (04:31):
Yes, I've just been over in Australia. It's a shocking
to go over there at the moment. Look, I've been
reading some commentary from you about the geopolitical state, not
only of the world, and we know what a mess
that is at the moment. But here in New Zealand
you're suggesting we're going back to the Muldoon days.
Speaker 2 (04:49):
Well, I'm not suggestingly found back to the Mile Doom's
day days. But I think what's going on at the
moment there's a fair bit of tension geo politically, just
strategically e bit of pain in regard to inflation. But
what you got out there at the moment is that
people are disillusioned. The voter base is just looking for
something a little bit different because they're suffering from a
(05:11):
little bit of pain. And I go back to Rob's
Mob in the nineteen seventies and nineteen eighties and that
sort of group of disillusions on voters that were seeing
their wages go up, but it was getting eroded by
inflation eating into it. And guess what, a whole lot
of roiling supporters sort of switched to what was called
Rob's Mob. Now I think we're starting to see a
little bit of a modern day version of Rob's Mob,
(05:34):
and we can call them sort of Peter's pack, we
can go the tops lot, we can do it at
Henry's sort of warde. You've got the younger generation, this
is the older generation. You've got these people middle age
that are sitting there and think they're real wages in
decline because inflation is anything sort of up. So we
can just start to see that there's a lot of
tension out there and believe in the National Party collectively,
(05:57):
they're about sixty one percent of the vote at the
moment that there used to be seen there to eighty percent.
So if they're sixty one, well the other lot of
thirty nine. So you get a situation where you've got
the tail wagon the dog. So what's the space.
Speaker 1 (06:11):
Well, my prediction for this election, and has been for
quite a while now, is that I think New Zealand first,
love them all, oath of them, rightly or wrongly, will
poll very well. What do you think.
Speaker 2 (06:23):
Well, they're on the up and they're praying into a
modern day version of Rob's Mob. But there's another political
group that you need to give an eye on here
and I think it's TOP, the Opportunity Party, Top's Lot
And yeah, this is the younger generation versus the older generation.
You've got the older generation that's done pretty well at property.
We've got the young generation that you can't afford a property.
(06:46):
There's huge amounts of tensions that there's huge portions of
what we call the modern day version of Rob's Mob,
which these smaller political parties are trying to pray empto.
So you're what's the space because once again that we
could end up with a situation here where we're seen
it before with the tail wags the dog.
Speaker 1 (07:06):
Interesting times, Cameron Baggery, thanks for some of your time
today on the country. Just repeating that key inflation number
four point one percent for their twelve months to June
of this year, Cameron, thanks is always for your time.
Speaker 2 (07:21):
Well the best, Jammy
Today's big news story is the inflation rate. Let's run
the ruler over the numbers with independent economists Cameron bagriy.
It's gone up from three point one percent in the
twelve months to March up to four point one percent
in the twelve months to June. Now the Reserve Bank
was forecasting three point nine percent. Cameron Bagri were you
(00:22):
surprised by these numbers or pretty much in line with expectations?
Speaker 2 (00:27):
I think brought in line with sort of the expectations
of obviously we're seeing feel prices yet back we had
a little bit and obviously you dup down. Now they're
back up. But if you strip out food and energy
and look at what's called core inflation, Look core inflation
in your gum, there's running around two and a half percent,
and that's the key number for the Reserve Bank. And
(00:49):
unfortunately they've got a target of two percent. It's two
point five. There's not exactly what you call two. So
they're going to be a little bit weary in regard
to what we call the flow and effect of your
higher fuel prices, higher third prices with that start to
feed into what's called core inflation. And yes, I don't
want to see core inflation at two point five? Do
(01:11):
you want that number closer to two percent? So, yes,
the headline number was a little bit stronger and expected,
but let's look beyond that and look at the core numbers.
And the core numbers they're just sitting a little bit
too elevated at the moment.
Speaker 1 (01:23):
Yeah, obviously these numbers were driven up by petrol and
the quarter up twenty seven point five percent. Is it
inevitable that the next time the Reserve Bank has a
look at the oci they lifted again. Or are they
worried that the economy is not in great shape to
take higher interest rates?
Speaker 2 (01:42):
Oh? Yes, you could slice and dice things a couple
of ways if you look at the inflation numbers themselves.
And I'm not talking about headline inflation because you've got
to lock a few fuel prices because the Reserve Bank
can't control that, but the fact that core inflation is
still around two point five the Reserve bank, but look,
you've probably got the ash I have a little too light.
(02:03):
But the other sort of the equation charmian is that look,
the only is actually firmer. Okay. The traditional sort of
model of selling well expense the houses to each other.
That's not working to Auckland WN and Bay twenty, those
places are down on the dumps. But you get the
regions and my god, there's a bit of economic strength
that's coming through. So you have a strengthening economy and
(02:23):
you've got an official cash rate that's still a two
point five percent. Now you're probably a little bit too light.
So this is the unfortunates of a parody in regard
to economics. But sometimes good news becomes bad because the
good news is the rural regions again bloody well. So
when the rural regions are starting real well, it's going
to flow out of the citizen goos and we know
that it's starting to take place, So the official cash
(02:45):
rate doesn't need to be as light. And we're not
talking about the Reserve Bank jumping on the brakes share
they're taking the foot of the accelerator. If they take
the official cash rate and say two point five percent
to three percent in the next six months, it's not
not exactly a bag in store. It's what for the
normalization story.
Speaker 1 (03:02):
The exchange rate at the moment against the US dollar
fifty eight sense, that's pretty export friendly for US isn't it, Cameron,
What sort of effect would these inflation numbers have on
that number?
Speaker 2 (03:15):
Oh, these numbers at the March and we're probably a
little bit stronger than expected. So the cancy is locked
a little bit up. But the cancers are two sides
of coins. And what we're seeing was it in the
United States. You have moved with the currency in the
past little week. It's been that US inflation numbers actually
came through a little bit lower and expected, so a
little bit less expectation in the US Federal Reserve is
(03:37):
going to be heightened interest rates, which has been US
dollar negative. If that's negative, then the MUSEEU and US
dollar tends to go a little bit up. Now, my
personal view is that they're still an inflation uncurrent in
the United States, and so I still think the United States,
the US dollar is going to be sort of capped,
and that's sub sixty cent sort of arrange, which is
what we call the export friend design, and I think
(04:00):
we can look forward to that for another sort of
yeah twelve months, which adds a little bit of sort
of prime on the top. In regard to the commodity
prices still look pretty robust, like our dairy prices of
the dawn, but beef prices are dull, looking pretty good.
There's still a fair bit of money that's in there
for the rule sector. When you look at things once again,
it's a rural export letter revival. What we're seeing a
(04:21):
crossings on and that lower New Zeale doll. And it's
not just the king US dollar. It's a curiosity boy.
But the curiosity doll is around eighty three cents.
Speaker 1 (04:31):
Yes, I've just been over in Australia. It's a shocking
to go over there at the moment. Look, I've been
reading some commentary from you about the geopolitical state, not
only of the world, and we know what a mess
that is at the moment. But here in New Zealand
you're suggesting we're going back to the Muldoon days.
Speaker 2 (04:49):
Well, I'm not suggestingly found back to the Mile Doom's
day days. But I think what's going on at the
moment there's a fair bit of tension geo politically, just
strategically e bit of pain in regard to inflation. But
what you got out there at the moment is that
people are disillusioned. The voter base is just looking for
something a little bit different because they're suffering from a
(05:11):
little bit of pain. And I go back to Rob's
Mob in the nineteen seventies and nineteen eighties and that
sort of group of disillusions on voters that were seeing
their wages go up, but it was getting eroded by
inflation eating into it. And guess what, a whole lot
of roiling supporters sort of switched to what was called
Rob's Mob. Now I think we're starting to see a
little bit of a modern day version of Rob's Mob,
(05:34):
and we can call them sort of Peter's pack, we
can go the tops lot, we can do it at
Henry's sort of warde. You've got the younger generation, this
is the older generation. You've got these people middle age
that are sitting there and think they're real wages in
decline because inflation is anything sort of up. So we
can just start to see that there's a lot of
tension out there and believe in the National Party collectively,
(05:57):
they're about sixty one percent of the vote at the
moment that there used to be seen there to eighty percent.
So if they're sixty one, well the other lot of
thirty nine. So you get a situation where you've got
the tail wagon the dog. So what's the space.
Speaker 1 (06:11):
Well, my prediction for this election, and has been for
quite a while now, is that I think New Zealand first,
love them all, oath of them, rightly or wrongly, will
poll very well. What do you think.
Speaker 2 (06:23):
Well, they're on the up and they're praying into a
modern day version of Rob's Mob. But there's another political
group that you need to give an eye on here
and I think it's TOP, the Opportunity Party, Top's Lot
And yeah, this is the younger generation versus the older generation.
You've got the older generation that's done pretty well at property.
We've got the young generation that you can't afford a property.
(06:46):
There's huge amounts of tensions that there's huge portions of
what we call the modern day version of Rob's Mob,
which these smaller political parties are trying to pray empto.
So you're what's the space because once again that we
could end up with a situation here where we're seen
it before with the tail wags the dog.
Speaker 1 (07:06):
Interesting times, Cameron Baggery, thanks for some of your time
today on the country. Just repeating that key inflation number
four point one percent for their twelve months to June
of this year, Cameron, thanks is always for your time.
Speaker 2 (07:21):
Well the best, Jammy
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