Car owners are being warned they will feel the pinch hardest as the US dollar drives down the New Zealand currency and pushes up petrol costs.
Fuel pump. Photo: RNZ / Alexander Robertson
The Kiwi has fallen to 64 US cents - the lowest in more than two years.
The director of Rankin Treasury, Derek Rankin, said petrol costs will rise as oil prices increase and the NZ dollar decreases. He said the government could help by dropping charges on petrol.
"If you want the New Zealand economy to slow down then just put the petrol prices up, and if you want the New Zealand economy to speed up then just lower the petrol prices.
"The Reserve Bank can adjust interest rates but many people have fixed mortgages, you know you can't fix your petrol prices. It effects people overnight, the next day they've got to put petrol in the car and it effects them immediately but interest rates take a long time to work their way through."
A rise in US interest rates and a drop in its corporate tax are some of the factors influencing the changes.