May 18, 2026 • 8 mins
Independent economist comments on a 4.1% rise in global food prices over the past two months, what it means for NZ farmers, and why rising global bond yields are keeping the NZ dollar in the US 58–59c range. Plus, the May 27 OCR decision, fuel and fertiliser pressures, the BNZ buy-up, what’s in the Budget for farmers — and why, in the end, it could be worse: we could be in Australia.
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Speaker 1 (00:00):
Cameron Bagri Independent economists, my economists, my favorite economist here
on the country. Always always a go to guy Cameron. Right,
let's start with this four point one percent rise in
global food prices and the obviously the resulting inflation around
that not good news. But could it be every cloud
(00:21):
having a silver lining? Could this be good news for
New Zealand farmers?
Speaker 2 (00:26):
Well, the potentially. But if you look at where we're
seeing those rises, initially, they're coming through what's what's called oils.
They're not coming through dairy or meat of the space
that both speakers come out of the Food and agriculture
organized only. And what they illustrate is that the shock
that we're seeing around the globe in the form of
an energy fuel, what we put in the tank of
(00:46):
the card these all that sort of stuff, that's the
first round effect. What we're now starting to see is
coming through that FAO food price measure which is up
four point one percent. Now that that's a sign that
you fertilize prices are moving up. We're starting to see
producer prices that are starting to move up around the globe,
and they're going to move into consumer prices. So what
(01:08):
have we seen in the past week, Jamie, a bit
of an inflation job. Where US inflation was up, bond
prices or bond yields in the United States are up
as well. Bond prices go up, equity markets tend to
become a little bit more uncertain regard to what's got
of going on to a lot more nervous is out
there because of inflation and food price inflation is this
(01:28):
one component of it.
Speaker 1 (01:30):
So global bonds are up. That's not good because yes,
as you say, it lowers the equity markets, which might
not be a bad thing in some markets, but also
increases the likelihood of inflation. But it also keeps our
exchange rate a wee bit lower. And this is obviously
very much a double edged sword for US as an
exporting nation at the moment when we're trying to import
(01:51):
stuff like fuel and fertilizer.
Speaker 2 (01:55):
Yeah, it is. But if I guess, if you step
back for a while now, we've been talking about it,
because I've been pointing out that I think I've thought
for a while that the United States has had a
lot more what's good sticky and undercurrent of inflation alarm
and behold headline inflation in the United States is rocket
up wide because of gas prices. But if we looked
at the latest reads on core inflation in the United States,
(02:17):
they are up. Doesn't matter where you look at the
consumer price index, doesn't matter where you look at what's
called the private consumption expenditure measure. These things are trending
around three three and a half percent. They're supposed to
be around two percent. So what we've seen is that
market has flipped in the United States. In the market
three to six months ago, we're saying the US Fetter Reserve,
(02:38):
that's the central bank, could be cutting rates. Well, now
the market's starting to think that their central bank, like
every other central bank around the globe, is probably need
to be hiking industrates. And of course if they're hiking
in theustrates even though we are, but the market has
repriced them more than us. That helps keep that new
zeal on dollar US dollar, and that's sub sixty cent
zone is what we call on that very export friendly zone.
(02:59):
Not great for importers, but a pretty good number for exporters.
Speaker 1 (03:02):
Could we possibly get a lift in the OCI as
early as May twenty seven.
Speaker 2 (03:08):
I've been on the record as saying, look, if by
it's the Reserve Bank. I'd go early, and the reason
I'll go early it's the old sort of maxim stitch
in time might save nine. So if you think you
need to have a little bit of work to do,
you better get it in there a little bit early.
They're supposed to go late because if you go late,
you might have need to go. They had a lot more.
Yet the data at the moment is probably not quite
(03:29):
dear for the going may so need to be a
little bit of a leap of faith. But he's steeping back, Jamie.
It doesn't matter with your locket. The United Kingdom, Australia, Japan, Europe,
and the United States New Zealand interest rates are moving up.
Why it's not just because global oil prices have moved up.
The most central banks around the globe, they've still got
(03:49):
an undercurrent of sticky core inflation in the two and
a half to three percent three and a half percent
sign on the top of that, you've got a bit
of what's good at a good shot. So central bank
is going to be a little bit sweaty, a little
bit nervous over the next sort a few months.
Speaker 1 (04:04):
That's funny how you mentioned Australia we we've always called
it the lucky country. Is it lucky now?
Speaker 2 (04:12):
No? I think I've got a suspicion a few chickens
are going to come home to roost in Australia. The
Reserve Bank of Australia has lifted their cash straight three
times since the started the year. Why because I've got
core inflation but three three and a half percent. The
headline inflation rate is four point six. Australia has been
(04:33):
suffering for the past couple of years that same old
disease the new zeons had by e weak productivity growth
and what's called high unit labor costs. Your unit labor
costs are ages divided by productivity. Your unit labor costs
in Australia are up fifteen percent in the past three years.
Your good luck running a business when you've got that
sort of unit labor cost pressure you. Meanwhile, the Australian
(04:55):
property market is sort of rocked on over the past
sort of a few years. Australia hasn't had a decent
economic shakeout since about nineteen ninety one nineteen ninety two.
Hence that phrase the so called lucky country. The bottom
line is, and we saw this in twenty three, twenty four,
twenty five in New Zeone. When you need to break
(05:16):
the back of inflation, you need to dish had some
economic pain, and I think that economic pain is around
the corner in Australia. Why because they've got an inflation
problem and they've got a reserve bank that's fixated a
lot inflation. So what's the space. You could see an
awful lot of New Zelanders that have gone to Australia.
Suddenly the side I'm coming home.
Speaker 1 (05:35):
I just got my air shute. At the beginning of
the show from a farmer, maybe he had a fair
point about me saying there shouldn't be anything in the
budget for farmers. I was referring to the bear and
backy budgets when there used to be straight out handouts.
But literally the carpetters bear at Mother Hubbard. There won't
be much in the budget for farmers. All the government
can do is have a conducive environment for farmers to
(05:58):
get on with doing the on.
Speaker 2 (06:01):
Yeah, well there's that. I had a function and I'm
wanting to that I am. It was a function based
talking about the well Into City Council. Of course, all
these people are saying what's what can well into the
city council do to drive regional growth. And my view
of that was that they can take us to the
zero line, and people say what's the zero line? And
the zero line is that don't screw it up, don't
get in the way, And that's a guess the way
(06:23):
I think about central government and local government. You've got
a job to do. Do the job. But if we
think that central government and local government is going to
lead the way, then I'm not sure that's you that's
where we're going to be going. You know. Then they
if you've got your own money in the game, and
by your own money, that's real cash. You need to
(06:44):
take real resk to make real money. And I'm not
convinced that central local government has got the attributes of
in terms have taken real rest, real money, you know.
So let's take us to the zero line, do the
basi's pretty well and let the private seed to take
over from there because we know how to take the manage.
Speaker 1 (07:00):
Okay, let's just finish on Winston. Is he barking up
the wrong tree or is he just playing barking mad?
Wanting to buy the b n Z. I was reading
another economist Michael Radell saying that the Benz's the Z
has valued it twenty four billion, and that's what we spent,
That's what it costs us to fund National super for
one year. Surely we've got better things to spend twenty
(07:23):
four billion on. Even though Winston seems to think he's
going to buy it for seven point five billion.
Speaker 2 (07:28):
Well, Benz had mactually about one point five billion. You
put a multiple on top of that around fifteen. They'll
probably want more than that than you're talking probably twenty
two to twenty five billion in regard to what they'll
want on the other side. Yeah, so there's no way
that transaction is going to take place. Yeah, so there's
a little bit of political stuff that's going on here.
(07:50):
But you have tip to Winston because what he's actually
pointing out is that we've got problems across the bank
sector in New ze and regard the competition. What he's
put on the table is of course one of the
sort of solutions that's here. Braine, it's not going to
take place. But what he's caught on too, it's the
same with supermarkets, is that we've got an issue here
in regard to what the respective return on equities are
(08:12):
out of those entities compared to what they're getting in
comparative countries such as Australia. So the bigger issue here
is competition. The solution is not buying one of them out.
That's harebrained. But what he's identified and coughten onto is
that there is a big issue here. So let's sort
this issue out, but through other means.
Speaker 1 (08:30):
Hey, Cameron Bergreen, great to chat to you on the country.
Always appreciate your wisdom and input.
Speaker 2 (08:36):
Geers any
Cameron Bagri Independent economists, my economists, my favorite economist here
on the country. Always always a go to guy Cameron. Right,
let's start with this four point one percent rise in
global food prices and the obviously the resulting inflation around
that not good news. But could it be every cloud
(00:21):
having a silver lining? Could this be good news for
New Zealand farmers?
Speaker 2 (00:26):
Well, the potentially. But if you look at where we're
seeing those rises, initially, they're coming through what's what's called oils.
They're not coming through dairy or meat of the space
that both speakers come out of the Food and agriculture
organized only. And what they illustrate is that the shock
that we're seeing around the globe in the form of
an energy fuel, what we put in the tank of
(00:46):
the card these all that sort of stuff, that's the
first round effect. What we're now starting to see is
coming through that FAO food price measure which is up
four point one percent. Now that that's a sign that
you fertilize prices are moving up. We're starting to see
producer prices that are starting to move up around the globe,
and they're going to move into consumer prices. So what
(01:08):
have we seen in the past week, Jamie, a bit
of an inflation job. Where US inflation was up, bond
prices or bond yields in the United States are up
as well. Bond prices go up, equity markets tend to
become a little bit more uncertain regard to what's got
of going on to a lot more nervous is out
there because of inflation and food price inflation is this
(01:28):
one component of it.
Speaker 1 (01:30):
So global bonds are up. That's not good because yes,
as you say, it lowers the equity markets, which might
not be a bad thing in some markets, but also
increases the likelihood of inflation. But it also keeps our
exchange rate a wee bit lower. And this is obviously
very much a double edged sword for US as an
exporting nation at the moment when we're trying to import
(01:51):
stuff like fuel and fertilizer.
Speaker 2 (01:55):
Yeah, it is. But if I guess, if you step
back for a while now, we've been talking about it,
because I've been pointing out that I think I've thought
for a while that the United States has had a
lot more what's good sticky and undercurrent of inflation alarm
and behold headline inflation in the United States is rocket
up wide because of gas prices. But if we looked
at the latest reads on core inflation in the United States,
(02:17):
they are up. Doesn't matter where you look at the
consumer price index, doesn't matter where you look at what's
called the private consumption expenditure measure. These things are trending
around three three and a half percent. They're supposed to
be around two percent. So what we've seen is that
market has flipped in the United States. In the market
three to six months ago, we're saying the US Fetter Reserve,
(02:38):
that's the central bank, could be cutting rates. Well, now
the market's starting to think that their central bank, like
every other central bank around the globe, is probably need
to be hiking industrates. And of course if they're hiking
in theustrates even though we are, but the market has
repriced them more than us. That helps keep that new
zeal on dollar US dollar, and that's sub sixty cent
zone is what we call on that very export friendly zone.
(02:59):
Not great for importers, but a pretty good number for exporters.
Speaker 1 (03:02):
Could we possibly get a lift in the OCI as
early as May twenty seven.
Speaker 2 (03:08):
I've been on the record as saying, look, if by
it's the Reserve Bank. I'd go early, and the reason
I'll go early it's the old sort of maxim stitch
in time might save nine. So if you think you
need to have a little bit of work to do,
you better get it in there a little bit early.
They're supposed to go late because if you go late,
you might have need to go. They had a lot more.
Yet the data at the moment is probably not quite
(03:29):
dear for the going may so need to be a
little bit of a leap of faith. But he's steeping back, Jamie.
It doesn't matter with your locket. The United Kingdom, Australia, Japan, Europe,
and the United States New Zealand interest rates are moving up.
Why it's not just because global oil prices have moved up.
The most central banks around the globe, they've still got
(03:49):
an undercurrent of sticky core inflation in the two and
a half to three percent three and a half percent
sign on the top of that, you've got a bit
of what's good at a good shot. So central bank
is going to be a little bit sweaty, a little
bit nervous over the next sort a few months.
Speaker 1 (04:04):
That's funny how you mentioned Australia we we've always called
it the lucky country. Is it lucky now?
Speaker 2 (04:12):
No? I think I've got a suspicion a few chickens
are going to come home to roost in Australia. The
Reserve Bank of Australia has lifted their cash straight three
times since the started the year. Why because I've got
core inflation but three three and a half percent. The
headline inflation rate is four point six. Australia has been
(04:33):
suffering for the past couple of years that same old
disease the new zeons had by e weak productivity growth
and what's called high unit labor costs. Your unit labor
costs are ages divided by productivity. Your unit labor costs
in Australia are up fifteen percent in the past three years.
Your good luck running a business when you've got that
sort of unit labor cost pressure you. Meanwhile, the Australian
(04:55):
property market is sort of rocked on over the past
sort of a few years. Australia hasn't had a decent
economic shakeout since about nineteen ninety one nineteen ninety two.
Hence that phrase the so called lucky country. The bottom
line is, and we saw this in twenty three, twenty four,
twenty five in New Zeone. When you need to break
(05:16):
the back of inflation, you need to dish had some
economic pain, and I think that economic pain is around
the corner in Australia. Why because they've got an inflation
problem and they've got a reserve bank that's fixated a
lot inflation. So what's the space. You could see an
awful lot of New Zelanders that have gone to Australia.
Suddenly the side I'm coming home.
Speaker 1 (05:35):
I just got my air shute. At the beginning of
the show from a farmer, maybe he had a fair
point about me saying there shouldn't be anything in the
budget for farmers. I was referring to the bear and
backy budgets when there used to be straight out handouts.
But literally the carpetters bear at Mother Hubbard. There won't
be much in the budget for farmers. All the government
can do is have a conducive environment for farmers to
(05:58):
get on with doing the on.
Speaker 2 (06:01):
Yeah, well there's that. I had a function and I'm
wanting to that I am. It was a function based
talking about the well Into City Council. Of course, all
these people are saying what's what can well into the
city council do to drive regional growth. And my view
of that was that they can take us to the
zero line, and people say what's the zero line? And
the zero line is that don't screw it up, don't
get in the way, And that's a guess the way
(06:23):
I think about central government and local government. You've got
a job to do. Do the job. But if we
think that central government and local government is going to
lead the way, then I'm not sure that's you that's
where we're going to be going. You know. Then they
if you've got your own money in the game, and
by your own money, that's real cash. You need to
(06:44):
take real resk to make real money. And I'm not
convinced that central local government has got the attributes of
in terms have taken real rest, real money, you know.
So let's take us to the zero line, do the
basi's pretty well and let the private seed to take
over from there because we know how to take the manage.
Speaker 1 (07:00):
Okay, let's just finish on Winston. Is he barking up
the wrong tree or is he just playing barking mad?
Wanting to buy the b n Z. I was reading
another economist Michael Radell saying that the Benz's the Z
has valued it twenty four billion, and that's what we spent,
That's what it costs us to fund National super for
one year. Surely we've got better things to spend twenty
(07:23):
four billion on. Even though Winston seems to think he's
going to buy it for seven point five billion.
Speaker 2 (07:28):
Well, Benz had mactually about one point five billion. You
put a multiple on top of that around fifteen. They'll
probably want more than that than you're talking probably twenty
two to twenty five billion in regard to what they'll
want on the other side. Yeah, so there's no way
that transaction is going to take place. Yeah, so there's
a little bit of political stuff that's going on here.
(07:50):
But you have tip to Winston because what he's actually
pointing out is that we've got problems across the bank
sector in New ze and regard the competition. What he's
put on the table is of course one of the
sort of solutions that's here. Braine, it's not going to
take place. But what he's caught on too, it's the
same with supermarkets, is that we've got an issue here
in regard to what the respective return on equities are
(08:12):
out of those entities compared to what they're getting in
comparative countries such as Australia. So the bigger issue here
is competition. The solution is not buying one of them out.
That's harebrained. But what he's identified and coughten onto is
that there is a big issue here. So let's sort
this issue out, but through other means.
Speaker 1 (08:30):
Hey, Cameron Bergreen, great to chat to you on the country.
Always appreciate your wisdom and input.
Speaker 2 (08:36):
Geers any
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