The inflation figures are out. It's gone up by one percentage point and there's now a four in front of it. A large part of that cost is petrol, which we can do nothing about. Diesel is up 7.1%.
But even excluding tradable inflation, which we can't influence, non-tradable inflation is still above the Reserve Bank's arbitrary target band. It came in at 2.9%. That's up from 2.4% a year ago.
There's stuff in there that really gets our goat, like the 12% rise in electricity prices. Rates are up 8.8%. That's the non-tradable stuff. We can influence that but we're not. It's all going up.
But all this increases the pressure on the Reserve Bank to raise interest rates to squash these price rises.
The problem I have with that is that the nascent recovery we're starting to see gets squashed as well, forcing us into a longer period of downturn and stagnation.
And that's because this simplistic inflation target does not take into account all the complex wheels that spin in an economy. It's this brutal, simplistic measure that served us so well when it was first introduced 30 years ago but is now seeing us boom and bust, lurching up and down on a rollercoaster that, you have to say, is no good for long-term economic planning.
There is a strong argument for a new way of calculating our economic position rather than relying on a single inflation figure. But it's going to take a very smart person to figure that out.
So until then, the fairground ride that is our macroeconomic setting will continue.
Andrew Dickens is a broadcaster with Newstalk ZB. - where this article was sourced.
20 comments:
Age Concern Auckland says older people are facing impossible choices as the surging cost of living crisis continues to bite.
Annual inflation had risen to 4.1 percent, the highest level in more than two years. Power prices were up 12 percent annually and rates increased by 8.8 percent.
People voted for a three headed right wing abomination. And this is what they get as a result. I hear the landlords are doing better though!
If the government is going to proudly practise tax purity, making more from each litre of petrol through GST, then it's part of the problem. And it must wear a fair chunk of the blame.
Again, the cost of freight rises through diesel costs and the government cashes in with increasing GST revenue but offers no relief. All very pure. Having been in Australia recently, the contrast is stark. NZ is harsh and flat, Australia not.
But for reasons unknown, the tax system cannot respond to this kind of situation to mitigate external shocks. Its frozen in cement. Rather the country shifts back toward recession, again, cost of living goes through the roof and inflation surges upward on a sick economy and Nicola Willis goes into her explanation mode, as she regularly does, to explain why it's not her fault.
Nationals lack of imagination, in abundance, is a good part of the reason we are where we are. Would Labour etc do any better. No. But listening to Willis blaming everyone else is not cutting it.
Again, National aren't polling in the mid to late 20's for no reason!
Maybe governments and councils could trim their spending. Oh wait, vanity projects and votes are far more important than the economy.
Anon at 7.22 what evidence do you have that landlords are doing better?
Andrew’s points are valid and well supported by his contributors. The thing we learn from history is that we don’t learn from history. The UK residents are being torched by escalating electricity costs as they pursue net zero madness and NZ mindlessly follows. There was much fanfare when this Govt suggested capping council rates, a process that could have been achieved instantly but obviously not in Hobbitville.
Under TOP’s land tax policy landlords will cop a $9,000 tax charge (using average NZ house prices) on every reports they own. That should punish the greedy capitalist b@$#@%ds. Will it also drive rent increases? Best not talk about that.
And do you think that your rates, water bills, or taxes of any sort are going to reduce if National's current version of 3 Waters and partnership with Maori proceed further ?
In fact what extra have you paid in rates for Councils to pay consultants especially Maori con artists, for the "work" done on these so far ???
Well, parents can not drive their cars to drop off and fetch children in, say, Wellington. That would save petrol costs. Where are the school buses that civilized countries have? Every single school kid should be on a school bus. What a dumb country.
Extortionate local authorities and utilities are NOT COST OF LIVING PROBLEMS.
They are indicative of failing and poorly managed infrastructure.
Anon 1128 the rents have always been set at the price the market is willing to pay.
Never ceases to amaze me the number of misguided and vitriolic anti free market comments that are generated in the comments section.
Apparently, no one should be free to pursue their own interests, and these holy saints elevate themselves above greed.
So, tell me why we should trust such resentful laden souls?
https://www.youtube.com/watch?v=RWsx1X8PV_A
This proposal by TOP to create a land tax leaves me scratching my head, since how can you demand money from owners (often pensioners) of a non- productive patch of land, that is as much a liability as it is an asset? Values don’t always increase, they recede at times, and who decides on fair value that a tax would relate to? I can only assume that TOP are simply seeking a reinstatement of the old death duties, since there’s no relevant income to tax at the time.
If you want facts, it’s currently hard to find good tenants, rates and insurance bills have increased substantially and pretty sure I read somewhere that rents are flat or decreasing. Mate - you’re dreaming if you’ think being a landlord is easy money for greedy people. But if you want to wallow in a big old pile of ignorant leftie BS you go right ahead.
Nothing about the poor retirees having to choose between power and nutrition, Anon 330? Facts sure do get in the way of sticking up for landlords.
Can you imagine a world without landlords? It would be like a world without lawyers. Doesn’t bear thinking about!
Stop your whining anon 7.16 and 7.17. Take responsibility for your situation and stop blaming everyone else. If you are so unhappy its because of you. Not the lawyers, the landlords and everyone else. YOU are the problem.
This blog and the comment threads are 90% whining, Anon 842. Is it your first day here?
Anon 229 we’ve spent 3 decades stuffing value into dirt to sell it back and forth, and now you want to complain about it unwinding at a completely acceptable and reasonable rate, for the future economic safety of our country. The Ponzi scheme has to end but you’re in denial.
No anon 7.16, 7.17 and 9.42. I just pity some of miserable lives and lack of responsibility that you show. The problem looks at you in the mirror every day and still you want to blame landlords and lawyers for your issues. I find it quite amusing, i mean, you could also blame teachers for you not winning lotto this week, but you probably actually do blame them. I still hope one day that you wake up before its not too late. Still if you are over 30 and behaving like you do, chances are you will never wake up. Who's fault can you pin that on?
Rents set at level market has been willing to pay? Not sure that explains the dozens and dozens of un-tenanted shops in Wellington. Some empty for 3+ years. I suspect landlords/owners simply refuse to ever lower rents. Guessing if unoccupied their costs go down even if untenanted and earning no rental income for years on end. Must be an ECON101 explanation as to the Empty Shops Syndrome.
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