April's Selected Price Index data has failed to provide compelling evidence for a Reserve Bank of New Zealand interest rate hike in May, according to BNZ analysis. The SPI figures came in softer than market expectations, suggesting inflationary pressures may not be building as rapidly as some economists had anticipated.

However, Westpac NZ economists caution that the full impact of recent oil price increases has yet to flow through supply chains across the economy. They warn that a 'sharp rise' in inflation remains likely for the middle part of 2026, as these cost pressures work their way through to consumer prices. This suggests that while immediate rate hike pressure may have eased, medium-term inflationary risks persist and could still influence monetary policy decisions later in the year.