Category: Business

Source: Radio New Zealand

Banks are moving interest rates higher, but the right term to pick depends a lot on how you think the economy will fare through the rest of this year.

BNZ on Wednesday increased its 18-month rate by five basis points, to 4.69 percent. Its two-year rate lifted by 20 to 4.89 percent, its three-year rate by 30 to 5.29 percent, its four-year rate by 30 to 5.49 percent and the five-year rate to 5.69 percent.

A day earlier, Westpac said it was increasing its rates, too. The one-year rate lifted by 10 basis points to 4.59 percent, and the two-year and three-year rates by 30 basis points to 5.19 percent and 5.29 percent, respectively.

It comes on the back of rising wholesale interest rates, which drive what it costs banks to borrow the money they lend.

The two-year rate has lifted from about 2.6 percent at the end of February to more than 2.8 percent.

Squirrel chief executive David Cunningham said although economists were split on whether the conflict in the Middle East would mean lower interest rates because of the impact on the economy, or higher interest rates because of the impact on prices, the markets were pricing in hikes.

“Ultimately, what the market prices is what flows through to the mortgage rates. We’ve really seen the pass-through of much higher swap rates, and so the banks naturally protect their margins and lift mortgage rates.”

He said other banks were likely to follow.

“The lowest point on the curve now is the six-month rate… if you take the six-month rate, it’s much lower right now, but you’re betting on interest rates not increasing, you’re almost betting against the market and taking the risk that they won’t be as high as the market’s pricing.”

Six month rates are available from about 4.49 percent, although some of the main banks are also offering one-year rates at that level, too.

Cunningham said if people thought markets had got ahead of themselves, it could be worth taking a shorter fix. “I’d probably go with six months on the basis that it feels to me like the market’s gone all gloom, and if anything, we’re going to unquestionably have a weaker economy because of the Middle East conflict.

“When it finishes, the oil price comes back down to the same level.

“Eventually, the world has a habit of sorting itself out, then the inflationary threats sort of disappear.”

He said people would need to consider their own circumstances and how they could cope with an increase, if interest rates did move higher.

But Infometrics chief forecaster Gareth Kiernan said there was “so much risk to the upside on lots of bad stuff at the moment”.

“Even though the two-year is a bit higher… in a world of uncertainty, paying a bit more in the short term to lock in at 5 percent-ish for two years is probably not a bad thing in my view.”

He said anyone who fixed for six months could be underestimating the chance of interest rates rising later this year.

“Financial markets would tend to back me up on that in terms of what swap rates and longer-term rates have done over the last few weeks.”

He said he expected a lift in the official cash rate in September.

“I guess the difficulty for the Reserve Bank is they’re trying to weigh up the negative effects on growth from higher fuel prices versus the effects of higher fuel prices on inflation more generally.

“We still have the view that businesses are more in a mindset to pass that kind of thing on than they were a decade ago… the Reserve Bank probably has to push back against that more than might otherwise be the case.”

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Source: Radio New Zealand

Consumer confidence slipped in the March quarter as global uncertainty made households more nervous about the economic outlook.

The Westpac McDermott Miller Consumer Confidence Index fell 1.8 points to 94.7. A level below 100 indicates pessimists outweigh optimists.

Westpac senior economist Satish Ranchhod said the survey was conducted in the first two weeks of March, when the Middle East war took hold.

“Against that increasingly uncertain global backdrop, households have grown a little more nervous about the economic outlook,” he said.

“However, at the time we spoke to households, many will not have seen the full impact of the conflict or experienced the rise in fuel prices.”

Ranchhod said the longer the war went on, the economy would see more disruptions and lead to more pressure on households.

“Many households actually told us that their financial position had improved over the past year, and that lifted spending appetites in recent months,” he said.

“However, cost-of-living pressures are picking up again, led by sharp increases in fuel prices.”

Confidence was highest in Gisborne/Hawke’s Bay, followed by Auckland, with both regions sneaking into optimism territory above 100.

Taranaki/Manawatū-Whanganui was the most pessimistic region.

“Women remain much more pessimistic than men and their confidence has dropped this quarter by 4.7 points, down to an index score of 85.9. In contrast, men have experienced a small rise in confidence of 1.5 points to 104.1,” said Imogen Rendall, market research director at McDermott Miller.

“Looking ahead to next year, both men and women have similar expectations for their personal finances, with around a quarter expecting to be worse off.”

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Source: Radio New Zealand

Property investors say new research shows that they contribute significant amounts to the country’s economy – but not everyone is convinced.

Work by Infometrics, commissioned by the New Zealand Property Investors Federation, showed that private residential property investors contributed $24.8 billion to gross domestic product, or 5.9 percent of GDP, and sustained 126,000 full-time equivalent jobs.

Federation advocacy manager Matt Ball said it directly countered the narrative that property investors were unproductive.

“Providing rental housing doesn’t just produce economic activity, it’s an enabler of economic activity throughout the economy,” he said.

“A well-functioning rental market allows workers, students, and families to live where they need to be. Without private investors providing most rental properties, the economy simply wouldn’t operate effectively.”

Infometrics chief executive Brad Olsen said investors were often thought of as one singular group but there was a clear difference between speculators and property investors more generally.

“What we’ve found is that not only is there a substantial level of economic contribution and workforce that are indirectly supported by property investment in New Zealand, but the work that’s coming through, it does provide economic value in terms of places for people to live.

“The new builds that come through, the maintenance and repair spend, that’s a lot of continual year-on-year activity that emerges in the economy.

“That’s not what I think people think of when they think of property investors.”

He said investors spent $4.1 billion in the year on maintenance and improvements.

But Council of Trade Unions policy director Craig Renney said if rental housing was owned by people who lived in it, that would generate maintenance work, too.

“Let’s assume someone buys a unit of housing and they have it as a private rental and then they replace the kitchen, great, that creates GDP. But that’s making an assumption that if it was in private ownership as an owner occupied property it wouldn’t do the same thing, which is clearly not a valid thing to hold true.

“A private owner might well maintain it to a higher standard than a landlord.”

Ball said it would not be the case that the properties were all otherwise owner-occupied.

“The rental sector exists and always will, it’s just a question of how big it is.”

Olsen said in some cases there would be an element of displacement.

“But you’re still getting a fairly large amount of work that comes out sort of just constantly year on year.”

He said the research did not take into account what investment activity did to property values.

He said first-home buyers tended not to buy the cheapest properties and investors were sometimes in a different part of the market.

“The sort of flow on effects through to other parts of the economy are important and we see that probably most in terms of the sort of employment effects… we calculated that 109 different industries do see some sort of effect.

“It’s concentrated particularly around construction and given that as a large employer that’s important. But it does go through to other areas and one of the reasons that we approached the analysis the way we did was to try and provide that broader scope of what’s the sort of flow-on effects.

“It’s not just the immediate impact of property investment at day one, it’s where does that go? You know, if you’ve got those 126,000 workers that are supported by property investment, 5 percent out of the workforce, where do they spend their money?

“And then you’ve got the nearly $11 billion or so that was coming through on new builds.”

But Shamubeel Eaqub, chief economist at Simplicity, said there were wider questions to ask, and any industry could be portrayed as being large when set out in the same way.

“The issue to consider is the necessity – provision of housing – versus the margin – where additional capital goes in the economy.

“I don’t think the critique has ever been that no property ownership is good. It’s whether we have disproportionate allocation of capital – we do – that distorts the market and creates efficiency and equity issues.”

Ball said the report had been commissioned to address claims that providing rental accommodation was “unproductive speculation”, or people just buying and selling houses for profit.

“The report shows it’s not.”

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Source: Radio New Zealand

The NZX is a small exchange, and it’s had a difficult stretch, but despite global events there may be hope on the horizon.

Once again global events have filtered down to New Zealand and hit our stock market – and our KiwiSaver balances.

But Kiwi investors in the NZX are used to bad news.

“Got to be honest, it’s had a tough five years,” said RNZ business reporter Jeffrey Halley.

“Its total return for the last five years is just under 1.7 percent. And in 2025 it actually made 3.3 percent, but it’s down about 2.6 percent in the year to date, the three months that we’ve seen in 2026, so it’s really been pretty flat.

“Now for context, over the last five years, the S&P 500 and the NASDAQ have returned around 85, 90 percent.

“It’s absolutely awful and there’s no sugarcoating that.”

Halley said we can blame the pandemic and the recession that followed, as well as the fact that we don’t have tech companies or many high-end manufacturing companies listed.

“Our NZX is really made up of sort of what you might describe as legacy industries – there’s utilities and telcos and some manufacturers, some shops and some airlines. It’s not technology and that’s what you can really point your finger at.”

But there may be hope on the horizon.

Anna De Souza is head of origination at the NZX and her job involves helping companies list. She can’t say how many companies are likely to list this year, because “the deal is never done until the company comes to market” but things are looking positive.

“I would say that at this stage the pipeline is probably the strongest it’s been in a really long time. We have several companies which are currently heavily underway in looking at that IPO [initial public offering] market.

“We’ve got strong interest from overseas entities looking to take a secondary listing on NZX as well as other small to mid-cap companies who are in the process and having strong conversations with NZX about taking that step.

“The last six months has actually been quite a great period for NZX. Over the last six months we’ve had five new companies list on the NZX and two have been this year.

“Both of those companies has a really strong start to trading.”

Those two are Tāiko Critical Minerals, which came to market earlier this month, and Rua Gold.

In today’s episode of The Detail, we look back at the NZX’s performance over the last several years, what needs to change, whether there’s a future for a local exchange.

Check out how to listen to and follow The Detail here.

You can also stay up-to-date by liking us on Facebook or following us on Twitter.

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Source: Radio New Zealand

New Zealand could experience a real fuel choke point in a fortnight, and Treasury’s worst-case scenario for inflation is too optimistic, says a leading economist.

War in the Middle East has effectively closed the Hormuz Strait, one of the world’s major shipping routes for crude oil.

While the government says New Zealand does not have a supply problem, it has conceded that rising prices will be putting pressure on some households.

Economist Cameron Bagrie says the real crunch point will come in just a few weeks, with fuel destined for New Zealand currently being refined in SIngapore or Korea after going through the strait before it closed.

“What that means in practise is that we’ve got about 30 days supply stored here locally, there’s about another 20 days on the water

“But it’s anybody’s guess as to what ships are going to be in the water two weeks down the track.”

He said a realistic picture should start becoming clear in the next week or two – “The critical variable to watch is going to be despatches of vessels out of Korea.”

While Treasury has said a 3.7 percent rise in inflation was the worst case scenario facing the country, Bagrie said he thought inflation was going to be closer to 3.7 percent as a baseline, with rises in oil costs following through into general price rises.

But he added that there was still so much uncertainty in the global economy.

“Three point seven is an incredibly low number to be putting out there if you are talking worst case scenario.

“There is a big risk that we need to manage, but that risk is unquantifiable at the moment because it’s a moving feast, just have a look at the volatility we’re seeing across markets oil prices get up around $110-$120 and then they’re down to $90, then they’re back up to $105

“There’s so much uncertainty out there and so much flip-flopping in regard to putting pen to paper and coming up with numbers.”

But Bagrie said he had been impressed by the finance minster’s moves this week.

“Nicola Willis has actually done a really good job in the past couple of days, being very measured and pretty honest in regard to her responses. Do we have a problem? The answer is yes. How much of a problem is it going to be? We don’t really know because this thing could settle down quickly, oil prices are up and down like a yo-yo.”

He said there would be a return to normalcy “at some stage”.

“No one knows what stage or how long the duration of this thing is going to last. If anybody can give me an idea of the duration or when Hormuz is going to open, we’ll give you a pretty firm economic assessment in regard to what’s going to be the economic hit.”

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Source: Radio New Zealand

New Zealand would benefit from a regime banning “excessive” supermarket prices, Consumer NZ says.

The organisation says some supermarket shoppers are questioning how quickly food prices have risen, as conflict in the Middle East pushes up oil prices.

There have been warnings that the cost of food may rise as producer and transportation costs increase.

Consumer NZ head of research and advocacy Gemma Rasmussen said it was understandable that shoppers were worried about how high prices could go.

Stats NZ data for February showed even before the impact of the conflict on oil prices was felt, food prices were up 4.5 percent year-on-year. Fruit and vegetables were up 9.4 percent and meat, poultry and fish 7.5 percent.

“When you pick up an item off the shelf, countless factors contribute to the final price. That makes it extremely difficult for consumers to know whether they are paying a fair and accurate amount,” Rasmussen said.

“Whether you’re an everyday shopper or a seasoned economist, breaking down the true pricing of any food item in a supermarket is close to impossible.

“The question for shoppers is: Are the prices you’re paying for food fair and competitive, and are there instances when the supermarkets are using external pressures as a smokescreen to jack their prices?”

She said when Cyclone Gabrielle hit the Hawkes Bay, she spoke to a producer who provided an example of a produce item that was affected by the floods.

“This resulted in the store price going from $3.50 a kg to $9 to $14.

“They said, if it’s sold for $3.50 retail, the supermarket is buying it for around $1.99 wholesale. It ended up reaching $4.50 wholesale, but despite this, it ended up being sold in the supermarkets for as high as $14.

“One supplier spoke on an instance when the margin a major supermarket made on a frozen product was close to 60 percent. He’s currently selling frozen produce with an alternative retailer who is ‘a dream to work with’ and takes only a 25 percent margin.”

She said businesses could set or increase their prices as they saw fit unless there was some form of price regulation in place.

“Australia had a similar model. However, from 1 July 2026, it will introduce a specific excessive pricing regime for very large supermarkets that will ban prices considered excessive in relation to supply cost plus a reasonable margin. If one of the big players breaches these rules it will face penalties of up to A$10 million, three times the benefit gained, or 10 percent of turnover.

“In effect, this is a direct attempt to curb price gouging and hold major supermarkets accountable where mark-ups are excessive and unjustified.

“New Zealand could benefit from a similar regime. Long-term structural reform has so far done little to meaningfully reduce supermarket pricing pressure, and with cost-of-living concerns continuing, households remain exposed to pricing that may be difficult to justify.”

Rasmussen said cost-of-living concerns were rising and shoppers were “continually” affected by potentially unfair or excessive pricing.

“New Zealanders don’t have time to wait for long term structural changes to be implemented and take effect.”

Woolworths and Foodstuffs were approached for comment.

Separately, Foodstuffs provided an update that said it was still business as usual at its supermarkets but its suppliers were planning ahead.

“New Zealand sits at the end of global supply chains, so we’re always looking upstream and keeping an eye on international events that could have flow-on effects for us,” said managing director Chris Quin.

“A large proportion of our products are grown or manufactured locally in New Zealand or Australia, sourced from Asia, or travel from Europe around the Cape of Good Hope at the bottom of Africa. So, right now our grocery supplies are largely unaffected by the disruption in the Strait of Hormuz, and our normal offer’s available in our stores. 

“The main issue at the moment is higher fuel, freight and packaging costs rather than product availability.

“We’ve seen the cost of diesel for our transport fleet rise significantly, but at this stage we’re absorbing that to help keep our food prices as steady as possible for customers.

“For every dollar on-shelf, around two-thirds goes to suppliers for the goods themselves.

“So if suppliers are facing higher freight, fuel, packaging or other input costs, those pressures flow through over time. As we’ve all seen, this is a fast-moving situation, with no clear timeframes or outcomes. The effects of what’s happening now with supply chains and fuel prices could still be felt months down the track.”

Woolworths said it was watching the situation closely. “At this stage our stock levels and pricing have not been affected but we continue to monitor it.”

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Source: Radio New Zealand

Strong sales in the second half of the year have helped put My Food Bag on track to deliver year-on-year profit growth.

The NZX-listed company is forecasting its full-year net profit will be between $6.4 million and $6.8 million, up from $6.3 million in the 2025 financial year.

Revenue is tipped to grow 4.9 percent on the previous year, with the level of retained customers in the meal kit business up year-on-year, according to chief executive Mark Winter.

“We’ve prioritised providing our customers with greater flexibility, offering the more convenience and reiterating the value of our offering,” he said.

Winter says the meal kit business has expanded in the past year to target more health-conscious customers, and now offers a high protein option, a diabetes plan and meals tailored to those taking weight loss drugs.

Rising cost of ingredients a headwind

Ingredient price inflation is still a challenge for My Food Bag, said Winter, with food prices generally up 4.5 percent in the year to February, according to Stats NZ.

But Winter said the company has managed to improve its gross margin for the second half, compared to the prior year.

“We’ve always prioritised what we can do internally to take unnecessary cost out that the customer doesn’t value and that includes at assembly sites around productivity.”

“We invested a substantial amount of money a couple of years ago in implementing light automation, so initiatives like that have allowed us to partially offset the food price inflation costs that we’re seeing come through.”

With the Middle East conflict generating an uncertain outlook for inflation, Winter said the company is keeping a close eye on developments and staying in contact with suppliers.

The company expects to release its confirmed full-year results in May.

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Source: Radio New Zealand

Food prices were up 4.5 percent in the year to February, and mince has recorded the biggest annual increase since data began.

Meat, poultry and fish led the increases, up 7.5 percent annually.

Fruit and vegetables lifted by 9.4 percent.

Sirloin steak was up 21.5 percent annually and even beef mince was up 23.2 percent, to an average $24.46 a kilogram.

Chocolate was up 20.3 percent annually.

Stats NZ’s price and deflators spokesperson Nicola Growden said the average price of a kilogram of beef mince was now $4.60 more than the same time in 2025.

“This is the largest annual price increase in beef mince prices since the series began in June 2006.”

Westpac senior economist Satish Ranchhod said export beef prices were up, which was being reflected in local prices.

Westpac is expecting beef prices to move higher still through this year, as global supply remains tight.

BNZ chief economist Mike Jones said international meat prices were at record levels. “Driven in particularly by a real tightening in the US market. US cattle numbers are at the lowest level since 1951, so they are short of beef and that is pushing the global price up. We’re now seeing that reflected more in the retail prices that we pay,”

He said it was hard on households who might have relied on mince to be a cheaper staple.

“If you look at the food price index, you’ve got much higher mince and meat prices, you’ve got bread, veggies all going up in some cases in double digits.

“And we’re starting down some big increase in petrol prices as well, so it is very much concentrated in some of those essential categories so it’s going to be particularly tough going for households that never got much relief from the cost of living. We’re going to have to have a pretty hard look at some of our forecasts for things like consumer spending over the rest of the year.”

Infometrics chief forecaster Gareth Kiernan said the increases were concentrated in red meat, rather than chicken or pork.

“The price at the sale yards for beef has gone up 71 percent since March 2024. Lamb is up 85 percent and that’s driven by strong demand out of China and the US. At the same time, global supply coming out of New Zealand and Australia is quite weak as well.”

Some things did get cheaper – olive oil was down 22.1 percent over a year and potato crisps down 3.2 percent.

Growden said chocolate biscuits also fell in price.

Food prices are expected to increase in the coming months as disruption in the Middle East pushes up oil prices.

Kiernan earlier told RNZ that sectors such as fishing were particularly exposed to increases in oil prices.

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Source: Radio New Zealand

Energy prices around the world are being squeezed by the conflict in the Middle East, but there should not be any price shocks in local power bills this winter, says the group representing the country’s biggest energy consumers.

The Major Electricity Users Group says power prices need to hold steady this winter, with businesses already shouldering cost increases driven by war in the Middle East.

The group includes Fonterra, meat exporter ANZCO, Woolworths and Datagrid – the company building a $3.5 billion artificial intelligence factory near Invercargill – and the members account for more than a quarter of New Zealand’s energy use.

The electricity bill can be the third highest cost for many businesses, after wages and raw materials, and over the past two years various manufactors – including several mills – have closed due to energy costs.

But Major Electricity Users Group chair John Harbord told Checkpoint that while it was a “very challenging environment” for its members, there should not be any power price shocks this winter.

He said the country’s hydro lakes have more water than they usually do due to a wet spring, and there was the strategic stockpile of coal at Huntly.

“At this stage, unless we get a prolonged dry period in the lead up to winter, we shouldn’t get price shocks due to scarcity of energy to make electricity with.

“Now obviously we don’t have control over the price, that’s set by the generators but there is no reason at this stage to expect a significant price shock passed from generators on to consumers.”

He said companies are currently absorbing increases in things such as shipping and insurance, and not adding a premium.

Harbord said electricity was an “absolutely critical” cost for businesses in the current environment.

“If it goes up at all and companies have to absorb it that’s going to put some strain on a lot of businesses, and not just our members, larger commercial or industrial users, but even your corner dairy, your retail shops as well, they’re ll looking at increases in electricity bills this winter.”

He said the system was already factoring in the increased demand from the AI factory, saying that it would take some time to get up and running, and the infrastructure was being prepared to handle it.

“People are building generation to get ahead of that.”

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Source: Radio New Zealand

Farmers say the skyrocketing price of fuel couldn’t have come at a worst possible time.

The end of summer marks the beginning of harvest season for arable farmers, a time when they can burn more than double the amount of fuel than any other time of year.

The price of a barrel of brent crude oil is currently at US$104 (NZ$179) a barrel, up from around $70 prior to the US and Israel’s attacks on Iran.

With no way of knowing how long prices will stay so high, or even rise higher, farmers are facing an uncertain future and struggling to figure out how to mitigate the costs.

A huge fuel tank greets you at the top of the driveway of John Austin’s Te Awamutu contracting company.

It holds 40,000 litres of diesel, and in peak season can get re-filled nearly everyday.

When last Sunday’s delivery rolled in, Austin said the bill made for tough reading, an extra 50.9 cents on every litre.

“I actually heard from one of our customers that fuel was going up, I didn’t even realise or know. We were down, it was on a weekend so our next shipment … for every 10,000 litres was another $5000.”

The busy time of year means Austin’s company does work for up to 50 farmers a day, operating combine and forage harvesters, tractors and trucks to help with their harvests.

It means they are using more fuel than any other time of year.

“It’s huge, one of our forage harvesters would use well over 1000 litres a day, probably 1500 litres.”

With weeks of the peak harvest still to come, Austin has had to think fast about how they’re going to cope with the massive price spike.

But with so much uncertainty it is impossible to know how things will pan out.

“It’s very hard for the business to be fair to the customers and work with the customers when you’ve got such a huge input to the business like fuel when there’s uncertainty around supply and price.”

While some of the cost will be absorbed, the company can’t afford to absorb it all, and have instead had put a fuel surcharge onto their customers.

“It’s impacting them already, it’s costing them extra on their farm when they drive their tractors, when they drive to town it’s costing them extra, and there’ll be lots of different ways our customers are impacted. It’s just not good for NZ it’s not good for the world, it’s not ideal.”

An hour north, at his Gordonton farm, Donald Stobie is preparing to harvest 200 hectares of maize and grain.

It’s a busy time of year, with all his machinery burning around 3000 litres of fuel a week, which he reckons is costing him an extra $1000.

But unlike contractors, he has got no immediate way to offset the cost, and it is being absorbed by the business.

“The crop prices are set in the spring time at planting time, and then the crops grow for six or seven months before you harvest, there’s like two thirds of a year there where if things change you can’t do anything about it.”

Like many farmers, he is also worried about the cost of fertiliser shooting up, with the Middle East a critical supplier.

He has started stockpiling for the planting season later in the year, in the hopes of mitigating some of price spikes.

Alongside fuel, he is concerned what impact these costs will have on his business if this continues for some time.

“It’ll certainly chew away at our bottom line, and I guess that’ll mean we won’t have money for our repairs or maintenance or any capital projects we wanted to do. It’s not just fuel there’ll be all sorts of other prices increases affecting us too from all our suppliers at that so there’ll be cost increases across the board.”

Down the road, the price spike has contracting company Gavins considering its options.

Business manager Chris Paterson said they have been forking out an extra $60,000 a week since prices went up.

While they don’t want to pass costs on to their customers, most of which are farmers, they may be left with no other choice.

“A likely outcome as it stands today would be for us to suck it up a bit and some of our charge out rates to go up a bit.”

Paterson said they are waiting to see how prices evolve over the next week or so before making any decisions, but the price rises are impossible to ignore.

“It is creating a dent today … there’s a real impact immediately, we’re burning fuel each day, the impact is immediate but the size or scale of it will evolve over time.”

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