Buzz from the Beehive
We are left wondering whether our hard-working ministers were numbed into inactivity by the latest inflation figures.
The only statement posted since Point of Order last monitored the Beehive website comes from Finance Minister Grant Robertson, who sounded curiously untroubled by the latest consumers’ price index data from Stats NZ.
These are the key facts, according to the official statistics.
For the September 2022 quarter, the:
- quarterly inflation rate was 2.2 per cent
- annual inflation rate was 7.2 per cent
Compared with the June 2022 quarter, the CPI rose 2.2 per cent (1.7 per cent with seasonal adjustment).
- Food rose 4.1 per cent, influenced by fruit and vegetables (up 17 per cent) and grocery foods (up 2.2 per cent).
- Housing and household utilities rose 2.3 per cent, influenced by home ownership (up 3.3 per cent) and property rates and related services (up 7.1 per cent).
- Transport rose 1.7 per cent, influenced by passenger transport services (up 18 per cent) and was partly offset by private transport supplies and services (down 2.5 per cent).
The increase of 7.2 per cent in the annual CPI was driven mainly by:
- Housing and household utilities (up 8.7 per cent, influenced by home ownership (up 17 per cent) and actual rentals for housing (up 4.6 per cent).
- Transport increased 12 per cent, influenced by private transport supplies and services (up 16 per cent) and passenger transport services (up 0.7 per cent).
- Food increased 8.0 per cent, influenced by grocery food (up 8.0 per cent) and fruit and vegetables (up 14 per cent).
The cost of non-tradeable items was up 6.6 per cent in the year to September 2022 quarter. The most significant driver of this movement was home ownership.
The cost of tradeable items was up 8.1 per cent annually. The most significant driver of this movement was private transport supplies and services.
And how did those numbers go down in the office of our Minister of Finance?
The cheering news (according to the first paragraph of his press statement) was that:
Inflation has eased slightly in the New Zealand economy amid a volatile international environment that continues to put pressure on prices, meaning the Government’s balanced financial approach to target spending is needed now that the emergency Covid spending is over.
He drew attention to global and climatic influences, beyond his policy control:
“Inflation is continuing to be heavily influenced by global factors, with the Ukraine war and pandemic related supply constraints affecting fuel and imported food and building material prices,” Grant Robertson said.
“Food price rises of 8 per cent for the year were not only influenced by global prices but also by severe weather events that affected growing conditions. Vegetable prices in the quarter rose 24 per cent.”
Insisting that his Government will continue “to carefully target spending in these highly uncertain times”, he thrust a barb at the Opposition:
“This is not the time to put that at risk by borrowing for tax cuts that benefit the wealthiest the most, as we have seen recently in the UK.
“This is why we aren’t spending the money saved on the deficit last year and tracking a carefully path back to surplus.
He called on us to take comfort from inflation rates elsewhere:
“Inflation globally is high, with forecasts showing other countries’ consumer prices are yet to peak. Australia is forecast to rise to 7.75 per cent by the end of 2022. Inflation is running near 10 per cent in the UK, over 9 per cent in Europe and over 8 per cent in the US. New Zealand is at the lower half of the pack in the 38-nation OECD.”
The future was still highly uncertain, he said.
Although “economists believe we are now past the peak of the cycle”, he acknowledged that inflation was expected to remain “elevated for some time compared with what has been experienced in recent times”.
National’s finance spokesperson Nicola Willis, not unexpectedly, headed her press statement inflation Figures Far Worse Than Expected
She said inflation had become embedded into the economy on Labour’s watch, with prices rising faster than forecasters expected and the annual increase was almost a full per centage point higher than the Reserve Bank expected.
“Runaway prices are making a mockery of Labour’s claims of a strong economy. In reality, out of control inflation means most Kiwis will be poorer tomorrow than they were today,” Ms Willis says
“These inflation figures are much worse than even the most pessimistic predictions, and make the Reserve Bank’s hopes of a slow-down look wildly out of touch. Bottom line: New Zealanders must yet again brace for more pain in their back-pockets.
Taking issue with Robertson’s urge to heap the blame on overseas forces, Willis said:
“Perhaps most worryingly, domestic inflation rose to 6.6 per cent, the largest rise since Stats NZ began the measurement.
And:
“Today marks the sixth quarter in a row of inflation running above 3 per cent – the longest period of elevated inflation since 1991. Inflation has become entrenched in the New Zealand economy and price increases are now eroding the financial security New Zealanders have built up through years of effort.”
And what would National do?
It would tackle inflation by eliminating bottlenecks in the economy, stopping wasteful spending, adjusting tax brackets for inflation, reducing costs to businesses, and returning the Reserve Bank to a single mandate.
ACT leader David Seymour similarly said the makeup of tradeable and non-tradeable inflation figures showed Labour could not keep blaming the rest of the world for inflation.
June-quarter tradeable inflation was 8.7 per cent and non-tradeable 6.3 per cent for an all-group inflation rate of 7.3 per cent. The latest all-group rate of 7.2 per cent was slightly lower thanks to tradeables such as petrol getting cheaper, but non-tradeable inflation had increased to 6.6 per cent.
“For a long time Labour has said inflation isn’t its fault, blaming overseas factors. Now that inflation of tradeables, things that can be bought and sold overseas, is easing, the attention turns to non-tradeable inflation, which is going up.
Goods and services that are not bought and sold overseas, such as medical costs, housing, and hospitality, are affected by domestic conditions, such as Government spending and monetary policy.
The Green Party focused on Grant Robertson’s agreeing – when interviewed on Morning Report today – that benefit payments are unlikely to keep pace with inflation.
The tools exist to lift every family out of poverty – and as costs continue to rise it is more urgent than ever that we use them, social development spokesman Ricardo Menéndez March said.
“When benefits don’t keep up with rising prices, people get poorer and are forced to make impossible decisions about whether to feed their kids or pay the bills. More families are getting into debt with the agencies that are supposed to support them and pushed to food banks just to survive.”
The Green Party would provide immediate relief to those struggling, by lifting benefits to liveable levels and indexing benefits and Working for Families to either median wage or inflation, whichever is highest, so that people can make ends meet.
Latest from the Beehive
18 OCTOBER 2022
Inflation eases amid volatile global environment
Inflation has eased slightly in the New Zealand economy amid a volatile international environment that continues to put pressure on prices, meaning the Government’s balanced financial approach to target spending is needed now that the emergency Covid spending is over.
Point of Order 
Of course he is not concerned it’s other peoples $$$$.
The minister is in cloud cuckoo land, blaming the previous previous government, overseas pressures etc. and conveniently ignoring the undeniable fact the 6.6% of the 7.2% is caused by domestic inflation, at the hands of the government and its ideological agenda.
This minister and the administration has to go for the sake of our nation, before it is too late.
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He can deny reality and spray the blame around all he likes. But the real judges of Robertson’s shocking mismanagement will be the poor first home buyers who have to refinance the million dollar mortgages on their rapidly depreciating assets at over 6 0r 7 % next year, up from the 2.5% they previously were paying.
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