Northlanders are likely to be hit harder than most by rising fuel prices, which could add more than $1000 a year to their bills, an economist says.
In the Northland Regional Council’s latest quarterly economic report, NRC economist Darryl Jones has outlined the risks to Northlanders from the ongoing Iran war, painting a bleak picture after a mixed year for the region’s economy.
Since fighting escalated between Israel and Iran, with the United States drawn into the conflict at the end of February, fuel costs have soared.
Despite a lull in fighting, with a two-week ceasefire announced on Wednesday, there’s no relief in sight at the pumps.
Motorists are being warned diesel could exceed $4 a litre this week after a 55c national price rise from Z.
Jones said the conflict had already had a big impact on people’s pockets and was likely to put further pressure on household budgets. The longer it continued, the worse it would get. It was hoped the ceasefire would see prices fall, but there was no guarantee.
Northland has a higher rate of vehicle ownership per household than the national average – almost two compared with 1.5 nationally, with Jones saying Northlanders also tended to travel longer distances.
According to the economist, in 2024 there were 160,000 light vehicles registered in Northland, with each doing an annual distance of 12,000km.
“Using the national average petrol passenger vehicle fuel consumption estimate of 8.4 litres per 100km, a 50c increase in fuel prices over a full year would equate to an additional $500 spent on fuel, assuming distance travelled remains the same,” he said.
“If the price rises by $1, then that’s an extra $1000 a year ... just in fuel costs.”
Jones said multiplying the extra cost by the number of light vehicles suggested an additional $80 million on yearly fuel costs in Northland.
“[That is] equal to around 2% of total retail spending in 2025.”
Jones said the lack of regionwide public transport meant there were few options other than driving to get around.
As well as higher fuel costs for households, Northlanders would also face increased prices for everyday items as companies passed on rising transport costs to consumers.
They might have to give up some trips or car share, but that extra spend would affect other spending, with the retail and hospitality sectors likely to take a hit as people gave up the extra coffee or treat from the shop as they tightened their discretionary spending.
“They won’t have as much disposable income, and areas like accommodation, retail and food and beverages will likely suffer the most.”
Jones said higher fuel costs would influence household choices and might slow retail activity further this year, affecting discretionary spending for Northland goods and services.
He explained retail spending was a helpful indicator of how the economy was tracking.
“It shows how much households feel able and willing to spend, and it also matters for employers.
“Retail is a significant part of Northland’s economy, accounting for around 9% of filled jobs and supporting activity in other sectors such as transport and wholesaling,” he said.
“Retail spending in Northland increased slightly in 2025, but rising prices mean households are still spending less in real terms than they were three years ago. Retail spending in Northland reached $3.8 billion in the year to December 2025, up 2.3% on 2024. This is the first meaningful increase after three years of very little change.
“However, when adjusted for inflation, retail spending was 0.5% lower than in 2024. Real spending has been falling steadily since 2022 and remains 3% below where it was three years ago.”
Jones said higher prices continued to shape household spending decisions, and many Northlanders were prioritising essential purchases and reducing discretionary spending.
Fuel companies say pump prices typically lag wholesale movements and could ease if oil prices stabilise.