New Zealand’s 2020 to 2024 inflation was two problems, not one. The political argument has been fighting the wrong half.
New Zealand’s 2020 to 2024 inflation episode was not one problem. It was two, and the political argument ran together the half that was a common small-country shock with the half that was distinctly ours.
Between the start of 2020 and the end of 2024 the Consumer Price Index rose 21.2 percent. The public argument over why was familiar. The Reserve Bank had been too loose. The Labour government had spent too much. Free trade agreements had drained dairy and meat offshore. Supermarkets had used the cover to widen margins. Each of those claims carries a mechanism. None can be adjudicated from top-line inflation alone, but the components of the CPI and a comparison with similar economies do say something about where the weight actually sat.
Tradeables and non-tradeables
Stats NZ splits the CPI into tradeables and non-tradeables. Tradeables are the goods and services whose prices are shaped mainly by world markets — imported cars, petrol, electronics, much of the packaged-food aisle. Non-tradeables are the ones set at home — rents, rates, education, insurance, restaurant meals, the labour component of local services. The division is useful because the two halves react to different pressures. A global shock shows up first in tradeables. Domestic demand, or domestic supply constraints, show up in non-tradeables.
Over 2020 to 2024, New Zealand’s tradeables rose 18.0 percent. The average of headline CPI over the same window across five comparable small open economies was 17.7 percent.
| Economy | Cumulative CPI, 2020–2024 (%) |
|---|---|
| Ireland | 19.8 |
| Norway | 19.1 |
| Finland | 18.1 |
| New Zealand (tradeables) | 18.0 |
| Singapore | 16.6 |
| Denmark | 14.9 |
| Peer average (headline CPI) | 17.7 |
The New Zealand number sits squarely inside the peer distribution. Year-on-year changes in NZ tradeables and the peer average have correlated at 0.85 over the past twenty-five years. The shape is consistent with a common shock rather than a distinctly New Zealand problem.
Non-tradeables did something different. They rose 23.6 percent — 5.9 percentage points above the peer average. That gap is the distinctly New Zealand number, and it is where the argument actually lives, whether the people arguing realise it or not.
What drove that 5.9-point gap is not something aggregate time series can settle. The candidates are the usual ones: housing costs flowing through into rents and services, a tight labour market after the border reopened, construction-sector capacity constraints, concentration in supermarkets and utilities, fiscal settings that fed demand into a supply-constrained economy. Several of these are true at once. What the data does settle is the size and location of the problem — it is roughly six percentage points, and it is on the domestic side of the ledger.
The food subplot
Food was the loudest subplot in the political argument. One popular version of the story runs through free trade: China’s 2008 agreement and the CPTPP in 2018 gave New Zealand producers new buyers for dairy and meat, so what used to be a domestic surplus — cleared cheaply on supermarket shelves because there was nowhere else for it to go — is now worth the export price. Economists call this mechanism supply-overhang absorption. When the overhang goes abroad, domestic consumers pay what the overseas buyer is willing to pay.
The shape of the data is partly consistent with that story, but only for specific products. Between 2008 and 2017 the ratio of NZ consumer beef prices to NZ beef export prices rose by about 25 points — beef on the shelf became persistently more expensive relative to beef at the dock, which is exactly what absorption predicts. A weaker version shows up for cheese. Lamb does the mirror-image trick: export prices collapsed in the 2020s, and the consumer-to-export ratio fell back to its pre-FTA level, consistent with the export channel failing and the old discount reasserting itself on that commodity.
As a story for broader supermarket inflation, though, the trade-deal mechanism does not fit. Between 2008 and 2024, the food categories that rose fastest were not the ones New Zealand exports.
| Food category | Cumulative change, 2008–2024 (%) | Major NZ export at scale? |
|---|---|---|
| Seafood | 78 | Partly |
| Restaurant meals | 76 | No |
| Cooking oils | 75 | No |
| Fruit | 70 | Partly |
| Vegetables | 53 | No |
| Dairy and eggs | 51 | Yes |
| Meat and poultry | 45 | Yes |
The non-export categories beat the export categories by 7.6 percentage points. That is the opposite of what the free-trade-did-it story predicts.
The fastest-rising food categories are not connected by export exposure. They are connected by labour, rent, retailer margin and imported commodity prices. Restaurants and ready-to-eat food are mostly wages and rent. Fruit and vegetables are retailer margin and seasonal volatility. Oils are a globally traded commodity set abroad. That list is the non-tradeables story running through the food aisle. It is consistent with the 5.9 percentage-point gap the top-line numbers already pointed to.
What the data settles
Roughly half of the 2020 to 2024 inflation episode was a global shock every comparable small economy took in similar size. The other half was a domestic problem, visibly larger in New Zealand than in countries with similar exposures.
Within that domestic problem, the specific mechanism of free trade agreements lifting supermarket prices holds for beef and cheese in the China-FTA decade. It does not hold as a general explanation. The faster-moving food categories are the ones where labour, rent and retailer margins dominate.
What the data does not settle
Which of the domestic mechanisms carried the most weight is a political question — housing policy, immigration settings, supermarket concentration, fiscal composition — and the numbers are not capable of deciding it on their own. But the case for the non-tradeables explanation is stronger than the case for the free-trade explanation, and the debate would be better if it started there.
Methods
NZ headline CPI, tradeables and non-tradeables from Stats NZ Consumers Price Index, quarterly series, cumulative Q1 2020 index to Q4 2024 index. Peer-country headline CPI from the OECD Inflation (CPI) indicator and the respective national statistics agencies, over the same window.
Peer selection: small open economies at roughly comparable income levels — Ireland, Denmark, Finland, Norway, Singapore. The peer set was fixed in advance; no country was added or dropped on the basis of its 2020–2024 inflation reading.
Food sub-group changes from Stats NZ CPI food group, cumulative 2008 to 2024. Consumer-to-export ratios for beef, lamb and cheese combine the relevant CPI retail series with Stats NZ Overseas Trade Indexes export price series for the corresponding commodity.
All figures retrieved on 20 April 2026.
Where do you think the six-point domestic gap sits — housing, labour market, supermarket concentration, fiscal? Leave a comment below.