The economy is cooling — with fresh annual inflation figures out today showing the third drop in a row from its record peak last year.
Stats NZ has released its latest measure of inflation — a 6.0% annual change in the Consumer Price Index (CPI) for the June 2023 quarter.
The quarterly inflation rate in the quarter was 1.1%.
Today's figures give greater certainty that inflation has finally peaked after hitting a 32-year high back in the June 2022 quarter.
Stats NZ consumer prices senior manager Nicola Growden said: "Prices are still increasing at rates not seen since the 1990s but are rising at a lower rate than the last few quarters."
She said today's figures indicated the biggest driver of annual inflation was food. This was due to rising prices for vegetables, ready-to-eat food, milk, cheese, and eggs.
"With food prices up 12.3% annually [in the June 2023 quarter], consumers may be buying cheaper alternatives to keep their food bill lower," Growden said.
Economists had largely forecast today's drop — citing lower petrol prices as a key reason for the fall, alongside a growing reluctance by households to spend.
"Vegetable prices increased 23.3% in the 12 months to June 2023, while ready-to-eat food and milk, cheese, and eggs increased 9.8% and 13.8%, respectively," Stats NZ said.
"The next largest contributor to the annual increase was housing and household utilities, the increase was due to rising prices for both construction and rents."
Growden said: "The price of building a new home has increased by more than a third in the three years from the June 2020 quarter."
The rising cost of living is making it tough for ordinary New Zealanders.
Napier resident Shaleah Lawrence's rent has gone from $340 to $390 a week. She told 1News that finding that extra $50 a week has not been easy.
"I am blessed with good landlords, but it was costs that have to be passed on, and it's a roll-on effect."
The 23-year-old said she has had to work extra hours in order to find the extra money, and has made cuts to her spending where she can.
"The heat pump's not on when it would usually be on. I'm not going on road trips. There's just things I'm not doing any more."
Chris Hipkins announced the changes as part of the Government's response to the rising cost of living. (Source: 1News)
But she said it's still a hefty financial and emotional burden to carry — especially when she has two younger sisters to take care of.
"I will go without so that they can have."
But the combined impact of higher living costs and devastating weather damage has put her business — and a key source of income — at risk.
"It used to be easier to see the light, but it's getting dimmer," Lawrence told 1News.
"That's the hardest thing. Like every quarter, I had hope this would be a really good drop year, but we are in danger, and that's what is scary."
Retail NZ's Aimie Hines said businesses across the country are feeling the pressure, with higher wage and freight costs one of the biggest areas affecting them financially.
"We have some businesses working through the process of closing down, which is really unfortunate," she said. "We want to see a vibrant New Zealand, but in this environment, some are taking that choice to close because it is a step too tough."
Political reaction: 'Encouraging' or 'out of control'?
Eighty-seven days out from the election, Finance Minister Grant Robertson emphasised that annual inflation was now at its lowest level since late 2021.
"This is encouraging news, with inflation continuing to head in the right direction at the same time Kiwis are in work in record numbers," he said.
"Quarterly inflation is now at its lowest level in over two years, while New Zealand's annual rate of 6% is below the OECD average of 6.5%."
"The Government is also doing its bit to ease inflation pressures by reducing spending to more normal levels and reduce overall demand in the economy, with real Government consumption forecast to fall by 5% by the beginning of 2025."
He pointed to the Government's Budget 2023 initiatives to address daily cost-of-living challenges for Kwis and claimed there were other "positive signs" for the economy.
"The economy is adding jobs, businesses confidence is starting to improve, tourists and international students are returning, overseas workers are filling vacancies and our public debt levels are among the lowest in the world to help deal with the challenges ahead."
Meanwhile, National's finance spokesperson Nicola Willis was keen to point to other countries — like Canada and the United States — which are also seeing inflation cool.
Willis said Aotearoa was uniquely being "held hostage by a persistent cost of living crisis".
"In the last week, we have seen Canada's inflation rate fall to 2.8%, and the United States' fall to 3%. Australia's inflation is also lower than ours, at 5.6%," she said.
"New Zealanders are continuing to be slammed with higher prices everywhere they look, and the Government has done nothing to bring it to an end.
"Global inflation is coming off the boil, yet New Zealand's is still piping hot."
She attacked the Government for "refusing to rein in spending, reduce costs or fix worker shortages" and therefore "fuelled our home-grown inflation fire".
"New Zealand is now entering its third year of out-of-control inflation — the longest period of high inflation since the early 1990s," she said.
"The Government's refusal to do its own bit to address inflation has left the Reserve Bank fighting on its own, giving them no choice [but] to crank interest rates ever higher."
SHARE ME