Economists are warning Kiwi households are set to feel financial strain until 2025.
In its latest economic outlook, Infometrics noted New Zealand households and businesses would need to "keep a close eye on costs and spending" until the middle of next year.
The outlook comes just days after a still-strong domestic inflation figure dashed hopes of near-term official cash rate cuts.
"That's a bit of a change from what most economists were thinking - if you go back a few months we were thinking... there was a bit more relief in sight [in 2024]," Infometrics principal economist Brad Olsen told AM. "That relief is still going to come through, but it's going to take longer to appear so at the moment, we've shifted our expectations back - the Reserve Bank may only be able to start cutting interest rates perhaps around November this year."
Infometrics said hopes of a "soft landing" were "disappearing in a flurry of housing market stress and rising unemployment".
"If the Reserve Bank is still worried about that high level of inflation... all of that is contributing to that idea that interest rate reductions aren't on the cards particularly quickly," added Olsen.
He said the economy still faced some major headwinds.
"If you go and talk to a lot of people - businesses and households - a lot are going, 'Look, I know it's tough at the moment, but I think I can make it work for the next couple of months - then I'm looking for that relief.' The message today is... you'll probably have to hold out for another nine-plus months.
"There is [light at the end of tunnel]... it's not another train coming down but it's not quite as quickly to come as we expected before."
Infometrics has forecasted annual consumer price inflation, which cooled to 4 percent in the year to March, to fall back within the Reserve Bank's 1-3 percent target range in early 2025.
