Liam Dann: NZ Herald business editor at large on inflation going up higher than predicted

New data shows inflation's gone up again - and there's concerns about what it could mean going forward.

The latest Stats NZ figures put the rate at 2.5 percent, up from 2.2 percent three months ago.

It's the first time it's risen in almost three years.

NZ Herald business editor at large Liam Dann explains what this could mean for the state of the economy.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from news Talk. Sa'd be
follow this and our wide range of podcasts now on iHeartRadio.

Speaker 2 (00:16):
Now. Inflation has increased slightly more than expected. It came
in at two and a half percent for Q one,
a little bit more than the two point four percent
we were expecting. We spoke to Gareth Kennan from in
Info Metrics about it earlier. It was a little bit
gloomy about our economy. And Liam Dan, the Herald's business
editor at large, is here to be a little bit
more gloomy again, aren't you. Liam.

Speaker 3 (00:32):
Yeah, I'm not here to cheer you up.

Speaker 2 (00:34):
Sorry, what's the gloomy you're bringing at me?

Speaker 3 (00:36):
Well, the inflation. The good news is the inflation's maybe
a bit of a red hearing. I mean, we all
hate it. At the food prices went up. We know
that the cheese and the milk and everything pushed it up,
and that it's got something to do with commodity prices,
and that's good for the economy.

Speaker 2 (00:51):
But and the coffee prices, yeah, coffee.

Speaker 3 (00:53):
Chocolate, all the good things. But what the reason that
the economists have confidence that inflation isn't coming back to
haunt us unfortunately is because the economy is.

Speaker 2 (01:03):
We're all going to get pounders trade war struggling.

Speaker 1 (01:06):
Yeah.

Speaker 3 (01:07):
Yeah, And so you look at some of the stuff
I read the Infometrics piece obviously. An Z this week
as well had a piece saying they now think the
OCI will have to go to two point five, which
is about fifty basis points lower than they'd said previously.
And you know the sense that the thing about the
A and Z one is that they hadn't even factored

(01:27):
in they're not factoring in the fallout from the trade
wars yet.

Speaker 2 (01:32):
So no, this is just how crappy our recovery is.

Speaker 3 (01:34):
Well, I guess what, there hasn't been any direct fallout
from the trade wars yet, but the shock to confidence
I think is an issue. So you know, the hit
to the key we say, of the market turmoil, and
if you're a business thinking about what's going to happen,
you know it just our recovery was such a fledgling,
you know, tiny little thing. Finally had this recovery going,
and now to have this big shock to global confidence,

(01:58):
it's really the worst possible timing. So you know, I
would think, you know, we may well, we will probably
see the Reserve Bank go lower, and we've probably got
to see them, I think, go fifty basis points in May,
because we kind of need to get ahead of the
curve before for you know, another gloomy winter.

Speaker 2 (02:16):
Yes, but then if they go fifty basis points in May,
you're doing the very thing that everybody says you shouldn't do,
which is overreact to the trade war, right you should? Yeah,
sit tight?

Speaker 3 (02:25):
And yeah, I thought about that. I mean May twenty eight,
so we've got a while. I think I think it's
five weeks or thereabouts by that.

Speaker 1 (02:31):
You know.

Speaker 3 (02:31):
Look, and I hope I'm wrong. I hope things go
really well from here.

Speaker 1 (02:34):
Ye.

Speaker 3 (02:35):
Yeah, And Donald Trump negotiates with all these countries and
solves everything with China and it doesn't need to happen,
but it doesn't quite feel like that.

Speaker 2 (02:42):
Okay. So here's my counter argument to that. Donald Trump
is not an idiot. I mean, you know, regardless of
what you think about him, he's very very He cares
very deeply what happens in the markets and what happens
in the economy. Right, that's the kind of thing that
he measures himself by. So if he sees things starting
to go tit's up. He's not going to go down.

Speaker 3 (03:00):
Yeah, he's paused various things and he could, but he
doesn't really care about our economy.

Speaker 2 (03:04):
So no, and so but if the war, if the
water economy really takes a hammering, it affects their economy,
doesn't It does?

Speaker 3 (03:13):
But we are very vulnerable to China. And look, you know,
good things could happen. You know, people have talked about it.
There's all sorts of effects. But I guess the issue
at the moment is, you know, like we saw it
in the card spending data earlier this week, people have
put their wallets away and that's not supposed to happen.
The interest rates are supposed to come down and they're
supposed to spend more. So you know, I'm reserving judgment

(03:33):
too on the on the tariff that the actual final
fallout from all the tariffs, how it lands, say, you know,
nine months, twelve months from now, but.

Speaker 2 (03:41):
What it's doing to our heads as well right now, the.

Speaker 3 (03:44):
Chaos and uncertainty is making it very difficult for this
recovery to get going.

Speaker 2 (03:48):
Do you reckon it's gone to Nichola Willis's head yet.

Speaker 3 (03:50):
Well, she's staying, she's very much, staying calm as she should.
You know, good, good, that's what you want from the leadership.
And she's saying she's going to stick to the script.
There's no room for you know, loosening the fiscal purse
strings yet. But you know, it could go either way
because it's it's again.

Speaker 2 (04:07):
It's I mean, she doesn't need to loosen it. They're
loose already. The woman spends more than Grant robertson.

Speaker 3 (04:11):
Yeah, but you know, like it is still a constraint
on growth and if this turns into a GFC type scenario.
And I'm looking at some stuff from Fitch today, Fitch
Ratings looking at global growth this year, and they're forecasting
it to be the worst, not counting the first pandemic year,
the worse sin it's twenty two thousand and nine. So
they're talking about global growth coming down to very very

(04:34):
low levels. And yeah, I hope, I certainly hope we
don't have to look at any kind of fiscal stimulus.
I know it's a really bad time for it because
we don't have much room to borrow anymore.

Speaker 2 (04:43):
But someone says, you're just depressed because of daylight saving
in winter.

Speaker 3 (04:46):
Yeah, I mean and the weather's lousy, that's right, and
we've got a store, so that's always a risk.

Speaker 2 (04:52):
Thanksfully, I'm appreciated for.

Speaker 1 (04:53):
More from News Talks B. Listen live on air or online,
and keep our shows with you wherever you go with
our podcasts on iHeartRadio