Data today shows headline CPI inflation at 4%, continuing the fall begun in March 2023. Rises are concentrated in particular sectors – especially services. This data also shows that that the minimum wage increase will be half the rate of inflation this year, taking money out of the pockets of those with the least.
“Inflation was being generated by rents, (4.7%), rates (9.6%), and insurance (14%). Rents are rising at the fastest rate since they were recorded in 1999. Housing & vehicle insurance increased more than 20%. These are all in areas that working people can’t avoid,” said CTU Economist and Director of Policy Craig Renney.
“Pricing for goods that in the past have generated inflation such as food are now much more subdued. Vegetable prices have fallen nearly 15% annually according to this report.
“However, petrol prices rose by 12% from last year. This is worrying as petrol pricing tends to lead inflation data. The faster we can transition to an electric vehicle fleet the better.
“Inflation is now in sectors that don’t respond well to interest rate changes in New Zealand – such as insurance. This should give the Reserve Bank a reason to pause and reflect on its future interest rate path.
“Overall, this data suggests that inflation is continuing its long road back to the Reserve Bank rate. In the last three months, inflation was well within the 1-3% band being targeted.
“Inflation is still higher in New Zealand than it is in other comparable countries such as Australia or the USA, where economic and employment growth is also stronger on the back of strong infrastructure spending, government investment, and higher wages.
“Prices in New Zealand are responding to pressures such as population growth and climate change. The absence of both a plan and investment from government in these areas suggests an absence of action on future price rises,” said Renney.
