Amid conflict in the Middle East upending economic expectations, this month we've also examined some trends across local government funding, and water costs. Both are important ongoing conversations, and we hope our analysis is helpful reference to feed into ongoing conversations about funding and financing across the sector.
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Principal Economist Brad Olsen examines the global oil price shock, driven by conflict in the Middle East, and the effect on the New Zealand economy. Higher diesel prices and concerns about availability are set to hit more highly exposed diesel-focused industries across transport, agriculture, and heavy industry. These pressures are rapidly feeding through supply chains, lifting costs, squeezing margins, and tightening financial conditions, even as the Reserve Bank signals it will largely look through the initial inflation spike.
Diesel has emerged as the critical pressure point in New Zealand’s current fuel shock, posing a far greater risk to economic activity than other refined products due to its dominant role across transport, agriculture, and heavy industry.
Local government funding is under growing scrutiny, as rising costs, shifting revenue streams, and potential policy changes force councils to rethink how they pay for services.
Delivering water services in New Zealand is becoming materially more expensive, and the gap between water costs and general inflation continues to widen.
0.3%
Filled jobs
in February (sa)
0.0%
Filled jobs
in January (sa)
0.1%
GDP
from Sep 2025 qtr (sa)
0.1%
Household spending
from Sep 2025 qtr (sa)
3.2%
Private investment
from Sep 2025 qtr (sa)