Consumers can expect price rises over the next two years, according to the New Zealand Institute of Economic Research.

The institute said increases will be a result of a further slow down in economic growth and a weaker New Zealand dollar.

Spokeswoman Vhari McWha said the institute is predicting a drop in economic growth from the current 3.5 per cent to around two per cent by March.

She said there will be belt-tightening over the next 18 months with pressure on prices and households facing higher debt servicing costs because of rising interest rates.

The institute is also predicting a drop in investment as the dollar depreciates over the next 18 months. Ms McWha said businesses faced with higher prices for imported capital equipment will be less willing to invest. 

She added that businesses are already reporting slowing levels of activity, increasing costs and declining domestic demand on the back of two years of rising interest rates.

- NEWSTALK ZB