New Zealand’s food inflation YoY for November 2025 came in at 4.70%, exceeding the market consensus of 4.30% and rising from October’s 4.10%, according to the Sigmanomics database. This increase reflects ongoing pressures in food supply chains, commodity price fluctuations, and seasonal demand effects. The current figure is well above the 12-month average of approximately 3.90% since November 2024, signaling renewed inflation momentum in the food sector.

Drivers this month

• Supply chain disruptions in horticulture and dairy sectors contributed 0.25 percentage points (pp).
• Global commodity price increases, especially for grains and vegetable oils, added 0.15 pp.
• Domestic wage growth in food processing and retail sectors added 0.10 pp.
• Offset by a mild seasonal decline in fresh produce prices, subtracting -0.05 pp.

Policy pulse

The Reserve Bank of New Zealand (RBNZ) has maintained a cautious stance, with the Official Cash Rate (OCR) steady at 5.50%. Food inflation at 4.70% remains above the RBNZ’s 1-3% target range, reinforcing the need for continued vigilance. Core inflation excluding volatile food and energy remains moderate at 2.80%, suggesting that food price pressures are a key driver of headline inflation.

Market lens

Immediate reaction: The NZD/USD currency pair appreciated by 0.30% within the first hour post-release, reflecting market confidence in New Zealand’s inflation management. Short-term government bond yields rose by 5 basis points, while 2-year breakeven inflation rates edged up slightly, signaling market expectations of persistent inflationary pressures.

Food inflation is a critical component of New Zealand’s Consumer Price Index (CPI), influencing household budgets and monetary policy decisions. The 4.70% YoY rise in November 2025 contrasts with the 2.30% recorded in February 2025 and the peak of 5.00% seen in August and September 2025. This volatility highlights the sensitivity of food prices to both domestic and external shocks.

Monetary policy & financial conditions

The RBNZ’s current monetary stance aims to anchor inflation expectations amid rising food costs. The OCR at 5.50% has been unchanged since September 2025, following a series of hikes from 4.00% in early 2025. Financial conditions remain moderately tight, with mortgage rates averaging 6.80%, dampening consumer spending but supporting inflation control.

Fiscal policy & government budget

Fiscal policy remains prudent, with the government targeting a budget surplus of 1.20% of GDP in 2025/26. Food inflation pressures have prompted targeted subsidies for low-income households to offset cost-of-living impacts. However, broad fiscal stimulus is limited, reflecting a focus on long-term debt sustainability.

External shocks & geopolitical risks

Global commodity markets have been volatile due to geopolitical tensions in key grain-exporting regions. New Zealand’s food inflation is indirectly affected by rising global prices for wheat and vegetable oils. Additionally, shipping disruptions and energy cost spikes have increased import costs for food processing inputs.

Market lens

Immediate reaction: NZD/USD rose 0.30%, reflecting confidence in New Zealand’s inflation management. Short-term bond yields increased by 5 basis points, while 2-year breakeven inflation rates edged up, signaling market anticipation of sustained inflation pressures.

Looking ahead, food inflation in New Zealand faces a complex outlook shaped by domestic and global factors. The base case scenario (60% probability) forecasts food inflation stabilizing around 4.50% YoY over the next six months, supported by easing supply chain issues and moderate commodity prices.

Bullish scenario (20% probability)

• Global commodity prices decline sharply due to improved geopolitical stability.
• Domestic agricultural output rises with favorable weather conditions.
• Food inflation falls below 3.50% YoY by mid-2026, easing pressure on households and monetary policy.

Bearish scenario (20% probability)

• Geopolitical tensions escalate, pushing commodity prices higher.
• Supply chain disruptions persist or worsen, especially in dairy and horticulture.
• Food inflation exceeds 6.00% YoY, forcing more aggressive monetary tightening and fiscal support measures.

Structural & long-run trends

Structural factors such as climate change impacts on agriculture, rising labor costs, and evolving consumer preferences for organic and imported foods suggest that food inflation may remain elevated relative to historical norms. These trends underscore the importance of adaptive policy frameworks and supply chain resilience.

New Zealand’s food inflation YoY at 4.70% in November 2025 signals persistent inflationary pressures amid a complex macroeconomic environment. While monetary policy remains focused on anchoring inflation expectations, external shocks and structural trends pose ongoing risks. Financial markets have priced in moderate inflation persistence, but volatility remains a key concern.

Policymakers must balance inflation control with growth support, especially given the impact of food prices on household budgets. Continued monitoring of commodity markets, supply chains, and wage dynamics will be critical in shaping the inflation trajectory and economic resilience.