“Excuseflation” is the term for using a tough economy as an excuse to disproportionately hike prices. Frances Cook explains the phenomenon and advises what you, the consumer, can do to protect yourself.
As the cost of living climbs up again, keep an eagle eye out for “excuseflation”.
It comes hand in hand with inflation, but it’s worse, because it doesn’t need to be happening at all.
I first came across the term a few years ago, and it's been rattling round my head ever since, because it explains so much.
A couple of recent ads were textbook examples of it. The first was radio ad for a big tech retailer, which I heard as I drove to a meeting. A chirpy voice told me prices were only going to head up, so quick, buy the TV now, before it costs even more!
That's not an ad for a TV. That's an ad for fear.
It's not telling you the TV is good, or even cheap. It's telling you to be afraid of the future, and to convert that fear into a purchase, today, at a price the retailer sets.
Later that day, a near-identical ad for furniture popped up on my phone. It told me that oil prices are rising, and while our prices haven't changed yet, you should move fast to secure your furniture at today's prices while they last.
There it is again. Fear, dressed up as a deal, nudging at current events without any reasoning for why their prices actually should go up.
Those two ads are a window into the dark side of inflation.
When costs are genuinely increasing somewhere in the economy, other businesses can use that as cover to lift their prices too, whether their own costs have gone up or not.
The headlines are everywhere that the cost of living is going up, and it’s hard to know what’s justified, and what’s not.
Some businesses know that, and know they have the perfect cover to raise their prices. Whether or not they actually need to.
The number inside the number
Stick with me on the numbers, because the fine print matters here.
Inflation for the June quarter hit 4.1%. The Reserve Bank wants it sitting between 1-3%, so that's unwelcome, though nowhere near the 7% peak of our last bad bout.
But look inside that number. Petrol is up 27.5% on a year ago. Diesel is up 71%.
Fuel alone makes up about a quarter of that headline inflation figure. Strip it out, and inflation drops to 2.9%.
So the underlying economy is warm, not on fire. The scary part of the number really comes down to one thing: oil.
The oil rollercoaster
The ups and downs of oil don’t help the problem, and general price confusion.
Late February, war closes the Strait of Hormuz, the shipping lane carrying a fifth of the world's oil. Prices have one of the biggest jumps ever recorded.
Here at home, 91 petrol blows past $3.60. Diesel jumps 43% in a single month. Ferries add surcharges, airlines lift fares.
Then: ceasefire, the Strait reopens, and by early July crude oil is back near where it started.
Round trip complete. Problem solved, right?
Nope. It's 2026, no stability for you.
Weeks later the Strait is officially "contested" again, and crude goes back over US$100 a barrel.
By the time this column publishes, who knows. The pattern here is more important than what’s happening today.
In that brief window when oil dropped by about a third, petrol here only budged down about 6%.
It was walking down the stairs it had sprinted up, and hadn't reached the landing before the next spike hit.
Economists have a phrase for this: rockets and feathers.
Prices go up like a rocket, but float slowly back down like a feather.
If there’s a second spike, it doesn't start from the old line, because it never fully got back there.
The problem with oil is that it impacts the price of many other things.
But not everything.
Some things need to be imported or transported around the country. Physical goods have to be moved. Any services involving transport.
But some businesses see a moment like this as an opportunity to raise prices past what’s actually needed, or even when they’re not impacted at all. They have the perfect excuse, because “everyone knows” things are simply becoming more expensive.
And so we get excuseflation.
They’re watching you
The Reserve Bank has surveyed New Zealand businesses about their pricing since 1963, and it shows a strong change in strategy.
When a business's costs and demand are both rising, in modern times the chance it puts prices up is about 85%.
Fair enough, you have to cover your costs.
But now flip it: costs are falling, customers drying up, every reason to cut prices. How often do businesses actually drop those prices these days? Just 9% of the time.
A few decades ago that gap was much smaller; 61% raised, 37% cut.
This is getting worse.
Crucially, this mostly happens to businesses selling to households, not to other businesses.
One of the reasons firms selling to each other don't change their behaviour is because checking the invoice is literally someone's job. Nobody audits the weekly shop the same way.
Forty small items, you're tired, the kids are hungry. Time-poor consumers are an easier target.
And the most damning finding: businesses where genuinely nothing happened, where they had flat costs, and flat demand, were still likely to start increasing their profits in times of inflation.
The fightback
That research already gives a hint at the only way to push back on excuseflation. It relies on being alert, and shopping around. First, you need to sniff it out.
Can a business name the increased cost they’re facing, or is it just "rising costs" and "the current environment"?
Does this business even use the thing it's blaming for price increases, or is a gym membership suddenly citing oil prices? When the cost comes back down, does the price follow?
Then, act.
Shopping around sounds small, but the Reserve Bank found businesses now watch your price tolerance more closely than they watch their competitors, in order to guide their price decisions.
Instead of looking to undercut competitors, businesses will watch and monitor how willing you are to stick with them when prices go up.
Your willingness to switch, complain, or simply notice, is the enforcement mechanism.
So use Powerswitch.org.nz or billy.govt.nz for power bills. Grocer or Price Pulse to compare food prices.
Get fresh insurance quotes every year, as a new customer, because that's who gets the good price.
Ring your broadband and mobile provider and threaten to leave, retention teams exist because it works. Use Gaspy for fuel.
You can't opt out of inflation. It’s still pretty hard to beat excuseflation.
But you can refuse to be the easiest customer in the room.
The advice in this column is general in nature and should not be read as personal financial advice.
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