Inflation rises to 7.3%, a 32-year high

Source: 1News

Inflation has risen to 7.3% and is now at a 32-year high.

The figures were released on Monday by Stats NZ.

Rising prices for construction and rentals for housing were the main driver.

Prices for the construction of new dwellings increased 18% in the June 2022 quarter compared with the June 2021 quarter.

"Supply chain issues, labour costs, and higher demand have continued to push up the cost of building a new house," Stats NZ's Jason Attewell said.

Meanwhile, prices for rentals for housing increased 4.3%.

Stats NZ said the next largest contributor to annual inflation was transport - up 14% thanks to higher prices for petrol and diesel.

Petrol prices increased 32% in the year to the June 2022 quarter, the largest annual increase since 1985.

Diesel prices increased 74%.

Stats NZ said food had gone up 6.5%, influenced by higher groceries, restaurant meals and ready-to-eat food.

'Record highs' of tradeable, non-tradeable inflation

It also said tradeable and non-tradeable inflation were at "record highs".

Stats NZ said the tradeable inflation rate measures goods and services that are influenced by foreign markets, while non-tradeable inflation shows how domestic demand and supply conditions affect consumer prices as they don't face foreign competition.

The tradeable inflation rate was 8.7% in the year to the June 2022 quarter, the largest annual movement since the series began in June 2000.

Petrol, diesel, milk, cheese and eggs were the biggest contributors to this.

Meanwhile, domestic or non-tradeable inflation was 6.3% during this time, also the highest movement since June 2000.

Stats NZ remarked higher prices for construction, rentals for housing, and ready-to-eat food were partly offset by road and rail passenger transport.

Some Govt cost of living measures have impact

Stats NZ said half price public transport fares and reduced road user charges, brought in in April, were reflected in the June 2022 quarter.

It described the rises in transport as being "partly offset" by falling prices for road passenger transport, international airfares, rail passenger transport, second-hand cars, and other private transport services, which includes road user charges.

On Sunday, the Government announced reductions on fuel excise duty, road user charges and half price public transport are being extended until the end of January 2023.

Figures reflect 'volatile, uncertain' global environment - Robertson

Finance Minister Grant Robertson said the latest consumer price index figures reflect the "volatile and uncertain global environment".

He said New Zealand isn't alone in experiencing higher prices, with inflation in both the UK and US at 40-year highs of more than 9%.

"Global factors such as the ongoing impacts of the pandemic on supply chains and the war in Ukraine are affecting prices, particularly those for fuel and building materials, and this means demand is not being met, and having a sizeable effect on New Zealand households and businesses."

Finance Minister Grant Robertson.

Both National and ACT have criticised this reasoning, however, with ACT saying both the UK and US are spending trillions and with National saying the Government needs to take responsibility for "policy failures" at home.

However, Robertson says Aotearoa is "well positioned" to respond.

"We are well positioned to respond with unemployment at a record low and debt at levels substantially below countries we compare ourselves with and we will continue to support New Zealanders to get through this challenging time."

Inflation getting 'firm grip' on economy – National

National's finance spokesperson Nicola Willis said inflation is getting a firm grip on the economy.

She said any Kiwi family can confirm rising prices are "smashing" household budgets and remarked there is "nowhere to hide from Labour’s cost of living crisis".

Nicola Willis.

"We have been calling on the Government to present a plan to fight inflation for months. Spending more and announcing temporary measures won't cut it. Spending billions to fight runaway inflation just puts more fuel on the fire, pushing up inflation and interest rates."

Willis called on the Government to adopt National's five-point plan to fight inflation - return the Reserve Bank to a single focus on price stability, reduce costs on business, remove bottlenecks in the economy, restore discipline to Government spending, and prioritise tax relief for workers.

Govt's tackling of inflation 'gesture politics' – ACT

ACT leader David Seymour said the Government's efforts to tackle inflation were "gesture politics" with a "fuel tax discount here and a one-off payment there that will make no difference to the underlying problem".

To "beat" the cost of living crisis, ACT wants to see "wasteful spending" cut by $6.8 billion, immediate tax relief and a reset of the Reserve Bank's monetary policy remit.

"There's one sector of the economy that is not in recession: Government. Thanks to inflation we have a finance minister who is raking in record taxes to pay for all of his spending. We're overtaxed and over-regulated. Grant Robertson needs to take his foot off the throat of taxpayers."