Rising pricing and wages threaten advisers’ hoped‑for rate relief
New Zealand’s economic pulse remains surprisingly strong at the start of 2026, with ANZ’s latest Business Outlook survey showing activity holding up even as talk of more rate hikes resurfaces.
ANZ New Zealand chief economist Sharon Zollner (pictured) notes that business confidence slipped 10 points from December’s 30‑year high of 74, but at 64 it is still “extremely strong”.
Expected own activity (i.e. businesses' outlook on their own future trading performance) dropped nine points, yet at 52 remains "historically very high".
Reported past activity – the best high‑frequency proxy for GDP – suggests a “solid Q4 GDP result could be on the cards, with a broad‑based lift", and Zollner says “the strength has been largely maintained into January.”
Reported past employment has also turned up, lifTING THREE points to +7, the highest since October 2022, and is now “back in the black for all sectors… That hasn’t been the case since late 2022".
With the 7 November election now set and Prime Minister Christopher Luxon campaigning on a message that “the recovery has now arrived”, ANZ’s latest survey provides some evidence of improving activity – but also fresh signs of inflation pressure.
Pricing intentions and wages are edging higher
The flip side for rate‑sensitive borrowers is the clear uptick in price and wage indicators.
Zollner highlights that “the net percent of firms expecting to raise prices in the next three months lifted 5 points to 57%, the highest read since March 2023", and firms now expect to lift prices by an average of 2.1% over the next three months – the highest in two years.
Mild wage pressure is also emerging. The expected wage increase of 2.8% is “hardly strong but has turned higher", while the share of firms that actually raised wages in the past 12 months has climbed from 67% to 72%, “the highest since April 2024". The average reported wage increase has ticked up from 2.6% to 2.8%.
ANZ: first OCR hike pencilled for December, but risk is earlier
Zollner describes the survey as a blend of “good news and bad news”. The good news is that “much of the surge in activity indicators in December has been largely maintained into January, despite the bounce in interest rates” after the November Monetary Policy Statement.
The bad news is that “signals that inflation pressures could be turning higher… doesn’t look consistent with the RBNZ’s (or our) inflation forecasts.” she said, “We are forecasting the first OCR hike to come in December this year, but if these pricing intentions manifest in hard data, it’ll come earlier than that.”
For mortgage advisers, that means building 2026 plans around a still‑improving economy, but with a clear risk that higher‑than‑expected inflation and pricing behaviour could bring rate hikes forward – making loan structure, refix timing, and borrower buffers more important than ever.
Stay informed with the latest housing market trends and mortgage insights — subscribe to our free daily newsletter.
