Cameron Bagrie: Independent Economist on inflation figures out today

An economist says digging into today's inflation figures will reveal the real picture.

Stats NZ is releasing Consumers Price Index figures later this morning, comparing prices between April and June against the same period last year.

Economists expect it surge to somewhere around 4%.

Independent Economist Cameron Bagrie told Ryan Bridge he's more interested in core inflation, which strips out food and energy.

He says it's been stubbornly stuck on 2.5% and the Reserve Bank will want that lower. 

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Episode Transcript

Speaker 1 (00:00):
Now, one thing you will be watching very closely if
you have four newborn babies is inflation. And goodness me
on this side of the Tasman, we're up again. We're
getting a number out this morning. Most economists have it
coming in at four percent. I think the RBNZ was
saving three point nine. Cameron Bagriy, independent economists and founder
of Baggery Economics US This morning, Cameron, good morning, No,
good morning. So what are you expecting.

Speaker 2 (00:24):
Here? Bye? Number looks like it's going to be something
around four. Look whether it's three point nine to four
point one is pretty material. I'm the key here is
going to be core inflation. Core inflation sort of scripture
food and energy and conflation's been stubbornly sticky around two
point five percent. You know, the reserve event would like
that number a little lower to two percent, which is
the biddle part of the inflation band game one. If

(00:46):
we see col inflation pick up in regard to we're interesstructive. Lot.
There you go.

Speaker 1 (00:50):
Do you think core inflation is going to pick up?
I mean we have eeded energy costs go up. And
this was this is the full picture of the war, right.
The last one we got only captured about a month
of it.

Speaker 2 (01:00):
Yeah, I think poor inflation is going to continue to
be simmering around that two and a half percent mark,
and that's going to place the Reserve bank in an
awkward position. And part of the problem got wrong is
that we sill have got pop inflation, but we really
didn't get fully on top of inflation inflation. He had
gone inflation that belows it got back to around two

(01:21):
point two percent. Normally, when you go through a recession
you see inflation dropped well below two percent. That didn't
drop below two percent. Your poor inflation was still in
the upper part of the one to three percent inflation band.
So when you see an inflation shot coming through the system,
which is what's coming through the system, you're going to
be a little bit more on alert. You're going to

(01:42):
be a little bit more cautious. And of course the
reserve banker's got interest rates. You know, the official cash
right is still what's called the funds a and the
fund zone is sort of when you've got the official
cash right for low three percent idea that you have
that ocr not in the fund zone by around three percent,
what's we call neutral. That's with the reserved, nor they've
got to foot an accelerator or the brake, which.

Speaker 1 (02:02):
Is where they'll get by Christmas. Right, Well, that's what
the markets are telling us they'll do. Would today's number,
I mean, how bad would today's number have to be
for them to put the really foot to put the
foot down on it.

Speaker 2 (02:13):
Well, we'll really put the foot down. Look like, I
think they're going to go respective. I just think if
you're a central bank and you've got inflation that's been
in the apple part of your zone or that out
of your zone for about five years, you want to
get that ICI back to three percent. And what we've
got at the moment is that it's pretty clear that
we've got a class shop but an improving economy and

(02:35):
the economy on the improve It is a good thing
when you've got the economy on the approved And Okay,
the GDP numbers for the dum quarter are not going
to look that great, but if you look at the
economic imitators outside of the guine Court, it's very clear
that things are picking up outside of the housing market.
So there's no need to say a special case rate
to be around two point and five percent. Okay, if
you own a property. It's like the official care s

(02:56):
arrate to remain pretty low. But yeah, people need to
wake up a reality that we don't get more wealthy
selling more expensive houses to each other, and so that
party is sort of over and the reserve being you know,
think they're going to be pretty cautious like most simple
banks around the globe, because we've just had inflation too
high to too long, and inflation is just a tax
on society.

Speaker 1 (03:16):
Cameron Begriy, independent economists, founder of Bagar Economics. That number
out this morning for.

Speaker 2 (03:21):
More from Early Edition with Ryan Bridge.

Speaker 1 (03:23):
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