Has your pay kept up with prices? Real wages in New Zealand, explained

Nominal versus real pay

Your nominal pay is the number on your payslip. Your real pay is what that number buys once price rises are taken into account. If your salary rises 3% in a year when prices rise 4%, your nominal pay has gone up but your real pay has gone down.

This matters most over several years. Small annual shortfalls add up, and a salary that has looked steady can lose a noticeable share of its value without any single year feeling like a pay cut. It works the other way too: in a year when prices rise slowly, a modest rise can still be a real one.

Using CPI and the Labour Cost Index

Two Stats NZ measures do most of the work:

• The consumers price index measures changes in the prices households pay. It rose 4.1% in the 12 months to the June 2026 quarter.
• The Labour Cost Index measures changes in pay rates for the same work. Salary and wage rates rose 2.0% in the year to the June 2026 quarter. The unadjusted index, which also counts rises from promotion and progression, rose 3.1%.
• The Quarterly Employment Survey measures average earnings. Average ordinary-time hourly earnings rose 2.8% in the same year, to $44.62.

Comparing your own pay with the CPI tells you whether your spending power has held. Comparing it with the Labour Cost Index tells you whether you have kept pace with pay rates for similar work. New Zealand work in numbers links to the Labour Cost Index and other Stats NZ series.

A five-year worked example

Stats NZ's CPI was 1,082 in the June 2021 quarter and 1,359 in the June 2026 quarter, a rise of 25.6%. To work out what a past salary needs to be today to buy the same, multiply it by the new index and divide by the old one.

Say you earned $70,000 in June 2021. To keep pace with prices, you would need about $87,921 in June 2026. If you now earn $80,000, you have had a rise of about 14% but prices have risen about 26%: in June 2021 dollars, your $80,000 is worth about $63,694, less than you earned five years ago. The gap to keeping level is about $7,900 a year before tax. The same method works for any two dates: use the index for the quarter your last rise took effect and the latest quarter published.

Your own costs may have moved differently from the CPI, which is an average across households. Rent, mortgage payments and food affect some households far more than others, so treat the CPI as a fair common measure rather than an exact one for you.

What the median has done since 2019

Across the whole workforce, Inland Revenue's median wage and salary income rose from $42,580 for the year ended 31 March 2019 to $61,958 for the year ended 31 March 2026, a rise of about 45.5%. Over roughly the same period, from the March 2019 quarter to the March 2026 quarter, the CPI rose 30.5%.

Adjusting one by the other, the median rose by roughly 11% to 12% in real terms, depending on how the prices are averaged. That is our calculation from the two published series, not a figure either agency publishes, and the median includes part-time and part-year earners, so it describes the middle of all earners rather than any one job.

Putting the gap in your pay review

A real-terms calculation gives a pay review a clear, neutral starting point. "Since my last increase in March 2024, prices have risen by X%, so keeping level would take $Y. I'd like to discuss a rise that reflects that and what I've delivered since." Our guide to asking for a pay rise covers the rest of the case.

Keeping level with prices is a floor rather than the whole case: add your results, any growth in the role, and what the market pays. The demo opens with no account and shows Your Career's pay record, with what the pay is worth after prices, how much it would take to keep level, and a pay review date with reminders six and two weeks before.

See your pay after prices, every quarter