Latest food price figures reinforce the economic-performance criticisms Opposition can fling at the Govt

“America’s next downturn  may have a mild flavour—but a bitter aftertaste”.  So  ran a headline in The Economist.

Juxtapose that to New Zealand, and  we  could be  served  a  double dose  of the bitter  aftertaste.

The  problem  here is  that the  authorities apparently didn’t  see it  coming and  now,  as  it  arrives, they could  be  slow  out of  the blocks in dealing  with it.

Prime Minister Jacinda Ardern kept  denying  there was a  cost-of-living  “crisis”.

After its impact nevertheless could be seen to be hitting  home, the Finance Minister  tacked on  to the  budget  some  measures he  hoped  would assuage  any  pain being  felt by  New Zealanders — although  the  queues  at  foodbanks  were already  lengthening.

The latest food price index shows a 0.7% increase in food prices for the month of May.  Food now costs 8.9% more than at the time of the last election and fruit and veges cost 16% more.

That  has  given Opposition parties a  free  hit  at the  expense of the governing party.

National’s  Nicola  Willis  said:

“These rapidly rising prices are part of the wider inflation tsunami hitting our economy, with hard-working Kiwis left swamped in its wake, as their wages rise slower than prices. While Labour likes to put this all down to pricing decisions made by supermarkets, the truth is New Zealand’s inflation problem is far more widespread.

 “Restaurant prices are rising at their highest rate since 2009, with ready-to eat food prices rising 6 percent in the year to date, as inflation gets a grip beyond supermarket shelves.

 “Grant Robertson has no plan to tackle inflation. The Government has instead poured more fuel on the fire with more government spending, pushing up interest rates and worsening the cost of living crisis”.

ACT’s  David  Seymour  contends the PM and Finance Minister are focussed on the PR spin around cost of living and blaming global events like the war in Ukraine.

“Meanwhile everyday New Zealanders who are struggling to make ends meet are getting forgotten. They deserve straight talk and common-sense solutions rather than disingenuous spin designed to distract from the mess they’ve created”.

Seymour  notes that New Zealand is a food superpower.

“New Zealand farmers grow enough food for eight times our population. We shouldn’t be in a position where we’re paying through the teeth to put food on the table, and it’s not the farmers and growers making any money.

Some might  argue it is the Reserve Bank’s task to curb inflation, but  it too has been slow into  battle. And the  enemy is  already  taking its toll.

Investors in the  local  sharemarket saw $4bn  carved off  the value of  their  stock.

Labour MPs might  not be too concerned at that— but  wait  till  their  constituents  see  what it has  done to  their KiwiSavings.

Finally,  as  the  Reserve  Bank starts firing  up  its  artillery,  rising  interest   rates are hitting  mortgage-holders  in   a  way they might never  have felt  before — and it  isn’t any  fun for them.

As  one  journalist noted:

“Arguably, interest rates should have been raised to pre-pandemic levels a lot earlier, which would have cut off the need for steeper rate hikes now.The official cash rate reached its pre-pandemic level of 1% only nearly two years after the country went into lockdown, and well after rising inflation took hold”.

Now  the  risk  is  that  if the  Reserve Bank hoists  the official cash rate  too  fast  and too high, it  will push  the  economy into  a  deeper  recession,   with  all that  might  mean  in terms  of  rising unemployment, falling  house  prices,  and,  dare  we  say  it,  greater  poverty?

It’s  not  the  kind  of  scenario any  government  wants in a looming election  year.

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