The economy is cooling — with fresh annual inflation figures out today showing the third drop in a row from its record peak last year.
But does that mean it’s time to break out the bubbly?
BusinessDesk NZ Investments Editor Frances Cook told Seven Sharp the answer is a bit complicated.
“It’s a really good sign and something people can take a bit of heart in,” she said.
“But, when we say that inflation has gone down, we mean it isn’t rising as much as it was so it’s still going up but not as badly.”
This means there won’t be a quick end to the current cost of living crisis.
“The devil is in the detail,” Cook explained.
“So, food prices are still going up a lot, housing and household utilities are still going up a lot and we don’t see much of a break on the horizon for things like food.”
There is “light at the end of the tunnel” though which may eventually lead to things like mortgage rates coming back down.
“The good part about this is the thing people in the financial world hate the most is surprises,” Cook said.
“So, this is pretty much in-line with what the Reserve Bank has been predicting that things will slowly start to cool down a bit and inflation will slowly come back down to normal.
“This shows the plan is going as expected and we can rely on what the Reserve Bank said what it will do next and that it will likely hold the official cash rate steady and maybe from next year start to bring them down again.”
Basically, maybe break out the pinot gris for now and hold the bubbly.
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