The labour cost index rose 2.0 percent in the year to June 2026 while consumer prices climbed 4.1 percent, Stats NZ data show.
Salary and wage rates increased 2.0 percent over the year ended June 2026, Stats NZ reported. The figure compares with a 4.1 percent annual rise in the consumers price index for the same period.
The labour cost index recorded a 0.6 percent increase in the June quarter itself. Private sector rates rose 2.0 percent annually while public sector rates increased 1.7 percent.
Average ordinary time hourly earnings reached $44.62 in the year to June 2026, up from $43.39 a year earlier according to the Quarterly Employment Survey. Full-time equivalent weekly earnings including overtime averaged $1,730, up from $1,679.
Unemployment rose to 5.6 percent in the June quarter from 5.4 percent in March. The underutilisation rate increased to 13.8 percent from 12.9 percent.
Industry results
Industry results varied. Wood and paper products manufacturing recorded the largest annual rise at 3.0 percent. Mining, local government, arts and recreation services, and other services each rose 2.5 percent. Transport, postal and warehousing, finance and insurance, and administrative and support services increased 2.3 percent.
Retail trade and accommodation wages rose 1.8 percent. Construction increased 1.6 percent. Electricity, gas, water and waste services rose 1.2 percent.
Stats NZ noted that 46 percent of reported pay rises were attributed to cost-of-living adjustments, up from 41 percent a year earlier.
Economist reaction
Kiwibank economist Alexandra Turcu said the cost of things has increased twice as much as the wages that the average Kiwi is getting.
“If you’ve had the same job over the last year then your real income has fallen by 2 percent.” — Shamubeel Eaqub, Simplicity chief economist
ANZ senior economist Matthew Galt noted real wages have risen by an average of 0.8 percent per year since 2020 compared with 1.1 percent in the two decades before 2020.
Policy and international context
The Reserve Bank of New Zealand raised the official cash rate to 2.50 percent on 8 July 2026 to help return inflation to target, according to the Reserve Bank’s July 2026 OCR decision.
New Zealand real wages remain 6.4 percent below early 2021 levels, the weakest recovery among 37 OECD countries, according to the OECD’s March 2026 report The Real Wage Recovery Is Slowing Down.
Treasury had forecast headline inflation peaking near 4.0 percent in the June quarter due to fuel prices before easing.
With the labour market softening and bargaining power shifting toward employers, economists say a sustained improvement in real wages will depend on inflation easing and a recovery in hiring conditions over the coming year.
The data come from the Labour Market Statistics: June 2026 quarter release published 5 August 2026.
