Inflation battle 'nowhere near' over - Economist
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- 23 Jan 2023
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Dropping inflation rates in our major trading partners should not be seen as a guarantee ours will start falling too, a prominent economist is warning.
New figures from Statistics NZ, released Thursday, showed food price inflation at its highest in nearly 33 years - up 11.3 percent on a year ago.
While the US and [https://www.theguardian.com/business/2023/jan/18/uk-inflation-dips-people-continue-to-feel-pinch UK are experiencing similar hikes in the cost of food, overall inflation rates in both economies appear to be easing.
The US figure has dropped from a decade-high in June of 9.5 percent to 6.5 percent in December, while the UK has seen its second consecutive monthly drop in its consumer price index, falling from 11.1 percent in October to 10.5 percent in December.
Infometrics principal economist Brad Olsen told Morning Report on Friday their modelling is pointing to inflation staying stubbornly high, by recent historical standards.
"Infometrics is now expecting that inflation will remain flat on an annual basis at 7.2 percent per annum - that would be a further 1.4 percent increase quarter on quarter.
"So there's still a lot of pressure in the system. Remember that anything more than 0.5 percent increase quarter on quarter means that you're well above the Reserve Bank's target."
The Reserve Bank's primary job is to keep inflation between 1 and 3 percent. Its latest monetary policy statement, released in November, predicts a recession "spread over several quarters", starting in 2023, with GDP contracting "about 1 percent" at its deepest. Read More…
