New Zealand’s economy has been through a turbulent few years, and things are not showing signs of calming down any time soon.

From Covid-19 lockdowns to the impact of US tariffs and now the disruption caused by conflict in the Middle East, there has been a steady stream of hurdles to contend with. It’s left many households wondering what is coming next.

A wary eye on inflation

Inflation has settled back to a more moderate level from the highs that it reached as the economy bounced out of the Covid pandemic.

Cost pressures have continued on many essentials however, which has meant many households have not noticed significant relief.  Food prices, insurance, electricity and rates are all unavoidable expenses for many households, and these have continued to increase at a sharp pace.

Now, disruption to oil supplies has pushed up fuel prices, hitting households in the wallet again. While this should be a temporary inflation spike, and the RBNZ expects it to moderate again towards the end of the year, it still has an impact.

Interest rates

Home loan rates have increased from their trough at the end of 2025. Reserve Bank data shows that from a low of about 4.5 percent, an average two-year special rate had climbed to more than 5 percent by the end of March.

It is expected that the official cash rate will lift towards the end of 2026, which will probably pull home loan rates higher again. The Reserve Bank has warned that it stands ready to act sooner if there are wider inflation effects as a result of fuel price rises.

Confidence still down

Confidence has been slow to recover, particularly for households who have been careful about spending. Business confidence reached a 30-year high in December, when firms felt positive about the year ahead. That has since taken a hit. 

Recovery still coming but unevenly

Forecasts are still predicting the economy will recover, although the timeframe has been extended by the latest conflict. Some forecasters say it may not now be until next year before things start to markedly improve.

Rural areas have generally been on the front foot with the economic recovery to date, because of the strength of the primary sector.

It has been noted that New Zealand is in a comparatively strong position to ride out the Middle East conflict, because inflation here had already moderated to a greater extent than in some other countries.

In such turbulent economic times, having your own clear financial goals, and a strategy to reach them, matter now more than ever.

Have questions?

If you have questions about your financial life in the face of this uncertainty, get in touch with the team at SHARE. One of our insurance or investment specialists can help you to ensure you have a plan in place to help you work towards your goals, no matter what is happening in the world.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.