Interest rates

SunLive – Robertson: Inflation hasn’t peaked yet

UPDATE: Finance Minister Grant Robertson expects the official inflation figure to rise when released later this week.

At the beginning of the month, the Reserve Bank intensified the fight against inflation with a half a percentage point increase the official exchange rate (OCR) at 1.5%, with a warning that further increases are ahead.

Food prices were 7.6% higher in March than a year earlier – the biggest annual increase in more than a decade.

With the inflation figure for the first quarter due to be announced on Thursday, Robertson is unwilling to speculate on what the number might be, but says inflation has yet to peak.

Robertson said morning report all commentators are predicting higher inflation this quarter, and potentially in the second quarter as well.

“I expect it to increase as it is everywhere in the world.

“How much he increases is obviously what everyone is debating.”

He says cutting fuel excise duties and road charges can contain inflation, but is a global phenomenon driven by supply chain constraints, Covid impacts -19 and the war in Ukraine.

In the United States and the United Kingdom, the inflation rate has now exceeded eight percent.

He agrees that some households are facing a crisis with rising food and gasoline prices.

A substantial government package which came into force on April 1 to help low- and middle-income households, as well as the reduction of excise duties on fuel, relieved some of the pressure, he says.

The package included significant increases for those on income support and those on the family tax credit, with the fuel initiative adding some more relief.

Winter energy payments begin May 1 for those with the lowest incomes as well as retirees, he said.

It excludes the removal of the GST on certain food products.

“I recognize it’s a tough time for a lot of people, but it’s hard to get through a 100-year economic shock caused by Covid without some impacts.”

Robertson says Prime Minister Jacinda Ardern’s first overseas trip in two years is very significant.

Singapore and Japan are New Zealand’s fourth and fifth largest trading partners. This trip is therefore an opportunity to discuss trade and tourism with the Prime Minister accompanied by representatives of the dairy, energy, food and technology sectors.

“It’s a great opportunity to go out and sell New Zealand.”

In Japan, it is possible to explore the opportunities around renewable energies, relying on the cooperation between the companies of the two countries on hydrogen.

“We think there’s a real opportunity for us to partner with a really big market there on how these technologies are developing.”

It is the start of several trips that Ardern and the ministers will take as the country reconnects with the world.

He disputes Export New Zealand’s view that the country has become a hermit kingdom and says the export sector has played its part with some government support to help New Zealand thrive during the pandemic.

EARLIER:

Mortgage interest rates reached 6% for fixed terms of four years.

Finance Minister Grant Robertson speaks to morning report on rising interest rates and inflation.

Earlier this month, the Reserve Bank of New Zealand (RBNZ) intensified the fight against inflation with a half a percentage point increase the official exchange rate (OCR) at 1.5%, with a warning that further increases are ahead.

Food prices were 7.6% higher in March than a year earlier – the biggest annual increase in more than a decade.

More soon…

-RNZ.