New Zealand businesses are grappling with rising costs and mounting pressure to increase wages, according to a recent business survey. The findings suggest underlying inflation pressures are building as companies struggle to retain and hire staff in a tightening labor market.

The survey reveals a growing number of firms expect to raise wages reflecting the competitive environment for workers. This trend could fuel broader inflationary pressures across the economy, as higher labor costs typically translate into increased prices for goods and services.

These developments pose a challenge for the Reserve Bank of New Zealand, which has been working to bring inflation under control. The central bank may need to consider additional interest rate hikes if wage growth accelerates further, potentially dampening economic growth in the process.