Pay and purchasing power
What pay rise would help your household keep up?
Inflation gives you a solid starting point for a pay conversation. The full answer to what your work is worth also depends on your role, your market and your performance.
Where pay and prices sit right now
Annual CPI inflation reached 4.1% in the June 2026 quarter. Wage rates are measured a quarter behind: Stats NZ's Labour Cost Index rose about 2.0% in the year to the March 2026 quarter, against CPI of 3.1% over that same year. Comparing like with like, a worker on a typical pay rise went backwards in real terms by roughly 1.1 percentage points over that year — the same pay buys less than it did. With CPI since rising to 4.1%, that gap is widening rather than closing.
The longer view is tougher again. The OECD Employment Outlook 2026, published 11 July 2026, ranked New Zealand last of 37 developed economies for real wage growth over five years, with real wages about 6.4% below their March 2021 quarter level. The OECD noted that real wages remain near the trough of the cost-of-living crisis in only two member countries: New Zealand and Australia.
The OECD measures this using Stats NZ's Labour Cost Index, which tracks the rate paid for the same job rather than average earnings. Broader earnings measures, which also capture promotions and extra hours, show a smaller fall. Every one of them still shows pay growth trailing price growth over the period. For a pay conversation the Labour Cost Index is the more useful measure, because it answers the question actually on the table: has the going rate for your work kept up with prices?
For context, the adult minimum wage is $23.95 an hour from April 2026, and median full-time weekly earnings are roughly $1,350–$1,400.
Figures as at July 2026; reviewed each quarter.
Work it out for your salary
Enter your salary to see the rise that would match the current headline CPI. Treat it as the floor of the conversation, not the whole answer.
Your gross salary, before tax.
Matching the current 4.1% annual CPI means a rise of about $3,280 a year before tax. Because the increase is taxed at your top rate, the rise that fully preserves your take-home pay is usually a little higher again.
Your household's own rate can sit above or below the national number. A two-car commuting household faced far more of this quarter's petrol-driven rise than a car-free household did. Estimating your household inflation first gives you a more defensible personal figure to anchor on.
Start with take-home household income
If your estimated household inflation is 3.2%, take-home income would need to rise by roughly 3.2% to keep buying the same things, assuming your household basket stays broadly the same.
Then widen the conversation
A salary discussion may also need to include:
- market pay for the role;
- performance and measurable results;
- additional responsibilities;
- skills scarcity and retention risk;
- internal pay equity and promotion scope.
Common questions
What pay rise matches inflation in New Zealand right now?
Annual CPI inflation was 4.1% in the June 2026 quarter. A take-home pay rise of roughly that percentage would broadly preserve average purchasing power, although your own household inflation rate may be higher or lower than the national figure.
What is a real wage?
A real wage is your pay adjusted for inflation. If your pay rises 2% while prices rise 4%, your real wage has fallen about 2%, because the same income now buys less.
Are NZ wages keeping up with inflation?
No. Stats NZ's Labour Cost Index rose about 2.0% in the year to the March 2026 quarter, against CPI of 3.1% over that same year. CPI has since reached 4.1% in the June 2026 quarter. Over five years, the OECD Employment Outlook 2026 ranked New Zealand last of 37 developed economies for real wage growth, with real wages about 6.4% below their March 2021 quarter level. Every available measure shows wage growth falling short of price growth over this period; they differ on how far short.
Which wage measure should I use in a pay conversation?
The Labour Cost Index. It tracks the rate paid for the same job, rather than average earnings across the workforce, which also moves when people are promoted or work longer hours. Since a pay review is a conversation about the rate for your role, the Labour Cost Index is the measure that matches the question being asked.
Should I use CPI or my household inflation rate in a pay conversation?
CPI is the widely recognised national benchmark and the safest anchor in a negotiation. Your household inflation estimate adds context about your own cost pressures, and can be worth mentioning when it clearly exceeds CPI.