The NZIER Quarterly Survey of Business Opinion (QSBO) for the June quarter came out last week. We review the responses and, in our chart of the week, we show how Kiwi businesses’ intentions to raise prices, often correlate with inflation one quarter later.
The survey results give us an indication on where domestic prices are heading. Spoiler alert: it’s up! In the first quarter of this year, roughly 43% (net) of firms indicated an intention to increase prices. That’s up from 25% in the last quarter of 2025. That intention may also feed into inflation in Q2 data.
It’s not just households being crippled by the cost of living crisis. Kiwi businesses have been feeling the pressure on their costs for a long time now. Over the past two years, a significant proportion of firms have reported costs increasing. Importantly, a much smaller proportion expressed intent to increase prices. This indicated that price pass-through has been constrained by weak domestic economic conditions. It also suggests businesses have continued to have their margins eaten into.
The latest data reveals businesses are at the end of their tether. As our chart shows, in June a net 51.9% (rounded, seasonally adjusted) of businesses plan to increase prices in the next three months. Both the net proportion of firms planning to raise prices in the next three months and the net proportion that increased prices in the past three months has steadily risen from early 2025.
For more detailed analysis on the cost and price data from QSBO, be sure to read our take on the data from last week.
Our chart also shows a close relationship between the intention of businesses to increases prices and inflation one quarter later. The sharp increase in the net proportion of businesses intending to increase prices in the coming three months may be an indicator that inflation is set to face renewed upward pressure.
Because this data only reveals intentions for three months ahead, we wait with bated breath to see whether this spike will persist beyond the next quarter. Although domestic economic conditions remain tepid, the Reserve Bank’s Chief Economist Paul Conway has highlighted price pass through is still a risk.
Conway’s argument is that Kiwi households have become all too familiar with persistent cost of living pressures over the past half a decade. If these expectations of price increases become embedded, businesses will face less pushback when raising prices. And this could risk continual upward pressure on inflation, even though the economy is relatively weak.
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