The numbers were out this morning and I think with 6 percent, we can say with confidence that, barring disaster, headline inflation in New Zealand has peaked.
From the post-pandemic high of 7.3 percent a year ago, we’ve now recorded 3 successive quarters of data heading in the right direction. I think we can call it a trend.
Today’s number isn’t surprising though, given the majority of mortgage holders have now moved off those all-time low interest rates.
But 6 percent is still a long way from the Reserve Bank’s target band of 1-3 percent.
And both the Reserve Bank and the big bank economists- who were all pretty close in their forecasts today- reckon it’s going to be a real slog to make the progress required in order to halve inflation from its current point.
What does it mean for the election? Well, the next CPI data isn’t out until October 17th, so this is it- the last set of data we’re going to get out of Stats NZ before Kiwis go to the polls.
But I think any sense of relief that Grant Robertson and Chris Hipkins have today will be nullified by the food inflation figures.
All sorts of metrics make up the CPI. But apart from buying petrol, there are few activities in which consumers regularly confront prices and price increases like the weekly supermarket run.
Yes, the cost of housing and construction is going up, but there is nothing like a trip to the supermarket to have the reality of rising prices literally in your face.
And both the Reserve Bank and the big bank economists- who were all pretty close in their forecasts today- reckon it’s going to be a real slog to make the progress required in order to halve inflation from its current point.
What does it mean for the election? Well, the next CPI data isn’t out until October 17th, so this is it- the last set of data we’re going to get out of Stats NZ before Kiwis go to the polls.
But I think any sense of relief that Grant Robertson and Chris Hipkins have today will be nullified by the food inflation figures.
All sorts of metrics make up the CPI. But apart from buying petrol, there are few activities in which consumers regularly confront prices and price increases like the weekly supermarket run.
Yes, the cost of housing and construction is going up, but there is nothing like a trip to the supermarket to have the reality of rising prices literally in your face.
Economists expect inflation in year to June to be about 5.9-6.1 pc
Inflation falls slightly second quarter, to annual figure of 6.0 percent
Liam Dann: NZ Herald Business Editor at Large on latest inflation figures
According to last week’s Food Price Index, fruit and vegetable prices are up 22 percent on June 2022. 22 percent! Meat, fish and poultry are up 11 percent, it’s brutal.
Today’s numbers don’t make it any likelier the Reserve Bank will cut interest rates before the election. If anything, they’re more likely to raise the OCR.
If the food price increases don’t cool down, it’s going to be very hard for the Government to argue that it’s actually winning the cost of living battle in a way that is meaningful for New Zealand voters.
They can point to that headline number, but sentiment is the thing that really matters.
And if voters don't feel like inflation is being brought under control and every time they go to the supermarket they get a nasty surprise- the CPI data isn’t worth much come the campaign.
Jack Tame is a well-known television presenter and journalist in New Zealand. This article was first published HERE
Inflation falls slightly second quarter, to annual figure of 6.0 percent
Liam Dann: NZ Herald Business Editor at Large on latest inflation figures
According to last week’s Food Price Index, fruit and vegetable prices are up 22 percent on June 2022. 22 percent! Meat, fish and poultry are up 11 percent, it’s brutal.
Today’s numbers don’t make it any likelier the Reserve Bank will cut interest rates before the election. If anything, they’re more likely to raise the OCR.
If the food price increases don’t cool down, it’s going to be very hard for the Government to argue that it’s actually winning the cost of living battle in a way that is meaningful for New Zealand voters.
They can point to that headline number, but sentiment is the thing that really matters.
And if voters don't feel like inflation is being brought under control and every time they go to the supermarket they get a nasty surprise- the CPI data isn’t worth much come the campaign.
Jack Tame is a well-known television presenter and journalist in New Zealand. This article was first published HERE
No comments:
Post a Comment
Thanks for engaging in the debate!
Because this is a public forum, we will only publish comments that are respectful and do NOT contain links to other sites. We appreciate your cooperation.