Economists say falling food prices are a certain sign inflation's going down - but we may have to wait to get the full picture.
Annual food prices have decreased for the first time in six years - sliding 0.3 percent in the year ending June.
Despite this, NZ Herald business editor at large Liam Dann says more data in other industries is needed to confirm if inflation is reducing.
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Speaker 1 (00:00):
Now, annual food prices have dropped, as I was telling
you for the first time as success, which was fantastic,
and the degree decrease was driven by lower prices for tomatoes,
cheese and potatoes. Liam dan is The Herald's Business editor
at large and.
Speaker 2 (00:11):
With us now Alim good A Heather.
Speaker 1 (00:13):
How big is this in terms of the factoring that
the decision making for the Reserve Bank, this particular set
of data.
Speaker 2 (00:21):
Well, it's a subset, I guess, so it's not as
big as what we get next Wednesday. So what we
got today, I think we're all learning about you. You know,
people know the difference now non tradable and tradable. You've
got your domestic inflation and your stuff that comes in
from imported prices and so on, and so the Reserve
Bank's worried about the non tradable stuff. There's a lot
of tradable stuff in here. So we knew it was
(00:42):
coming off. We knew, you know, after the sight clones
of last year, that fruit and vege was going to
look a lot better. Cheese prices are looking pretty good
in the supermarket right now, which you know, ironically is
not great for the economy because you'll probably hear a
bit later that it's not good for the farmers. But so,
you know, we're seeing that stuff. Petrol was down across
(01:04):
the year, that's good. But what the Reserve Bank really
needs to see is the service sect, the rates, the insurance,
all that non tradable stuff, and we get most of
that next week in the full CPI inflation data. So
that's when we'd you know, possibly get some numbers that
(01:24):
might justify that kind of sort of optimistic turn we've
seen in the last twenty four hours or so.
Speaker 1 (01:30):
So the reason it's come back largely is fruit and
veggies down sixteen percent. But then on the other side,
olive oil has it a massive price surge. One leader
is up nearly fifty percent to twenty bucks. Has your
family switched away? Have you guys gone rape seed oil?
Speaker 2 (01:44):
Yet? Good? Good, good point. I've been talking about the team, go.
Speaker 1 (01:50):
With with the missus, go with it.
Speaker 2 (01:51):
Yeah, well no, actually I did the cooking, so but
the team at worked, you know, go with the cheap oil,
put a splash of extra vergin, and then you've kind
of cut yourself a cheap olive oil substitute. Well, I
don't know if it's a fact. I just made it up,
but it seems to work. I mean, you know, Olive
the extra Virgin's got all the flavor and it's priced,
it's slightly more expensive, but you use a tiny bit
(02:12):
of that with some cheaper, cheaper oils. But you know,
that's crazy. That's down to you know, that's down to
what's what's happened in Spain and Italy and it's it's
one of those shocks, and it's an interesting shot because
it's one of those things that reminds us that we
need to get our own domestic inflation down because we
have no control over the stuff that goes on around
the world. You know, we could we could see petrol
(02:33):
prices spike again, something bad could or probably will happen
in the world in the next year or so. So
you know, we can't rely on just you know, global
prices going our way. We've we've kind of got to
get it under control in New Zealand and yeah, hopefully
we're nearly there.
Speaker 1 (02:50):
Yeah. Now, I know what you're going to say, Liam,
You're going to say, hither you always talk smack about
Adrian or but Liam, this flip flop is credibility damaging,
isn't it.
Speaker 2 (03:00):
Well, yeah, I thought about this. I mean, look, I
was I was a little confused like everyone about the
September you know that that September forecast, And I guess
it was trying to talk tough to you know, to
get get to put the fear of God, I get
into the everyone in the economy, and it kind of worked,
and maybe it works too well. But look, it's it's
(03:20):
it's it's all a bit of a strategic game. All
the talking and speculating and what the markets do. In
the end, you've got to look at the results. And so, Okay,
there's a fair bit of criticism for inflation going too high,
that's that's one thing. But if you can get inflation
back in its blocks by the end of the year,
that's that's a result. So yeah, you know why what
(03:44):
they played it really tough and then they've softened it.
Speaker 1 (03:46):
No one they were going to it's the problem, no no.
Speaker 2 (03:48):
No one, No one believed it was going to.
Speaker 1 (03:50):
So they didn't have credibility. So you basically you agree
with me, they didn't have credibility.
Speaker 2 (03:54):
Well, I think it's part of the game. I don't
know if it's I don't know if that, you know,
like again, what what counts is? Then if you're going
to argue the credibility line, I would say.
Speaker 1 (04:02):
The most important thing is the inflation.
Speaker 2 (04:05):
Yeah, so that is a fair argument. That is around
what happened over the last year and a half. I mean,
you can talk about the global context and all that
sort of stuff, but it was well outside the box,
you know. But can they get it back down? That
will be that will be I mean, I think that'll
be a victory if they can get it back down
this year and they can keep unemployment under five something
(04:25):
like that, five point three, you know. Yep, But that's
that's me. Yep. You can have an opinion. That's that's
why it's.
Speaker 1 (04:32):
Allowed on opinion, and I appreciate that your opinion is
a positive opinion. Liam. Thank you, Liam Dan the Heralds
Business editor at large. For more from Hither duplessy Alan Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
Now, annual food prices have dropped, as I was telling
you for the first time as success, which was fantastic,
and the degree decrease was driven by lower prices for tomatoes,
cheese and potatoes. Liam dan is The Herald's Business editor
at large and.
Speaker 2 (00:11):
With us now Alim good A Heather.
Speaker 1 (00:13):
How big is this in terms of the factoring that
the decision making for the Reserve Bank, this particular set
of data.
Speaker 2 (00:21):
Well, it's a subset, I guess, so it's not as
big as what we get next Wednesday. So what we
got today, I think we're all learning about you. You know,
people know the difference now non tradable and tradable. You've
got your domestic inflation and your stuff that comes in
from imported prices and so on, and so the Reserve
Bank's worried about the non tradable stuff. There's a lot
of tradable stuff in here. So we knew it was
(00:42):
coming off. We knew, you know, after the sight clones
of last year, that fruit and vege was going to
look a lot better. Cheese prices are looking pretty good
in the supermarket right now, which you know, ironically is
not great for the economy because you'll probably hear a
bit later that it's not good for the farmers. But so,
you know, we're seeing that stuff. Petrol was down across
(01:04):
the year, that's good. But what the Reserve Bank really
needs to see is the service sect, the rates, the insurance,
all that non tradable stuff, and we get most of
that next week in the full CPI inflation data. So
that's when we'd you know, possibly get some numbers that
(01:24):
might justify that kind of sort of optimistic turn we've
seen in the last twenty four hours or so.
Speaker 1 (01:30):
So the reason it's come back largely is fruit and
veggies down sixteen percent. But then on the other side,
olive oil has it a massive price surge. One leader
is up nearly fifty percent to twenty bucks. Has your
family switched away? Have you guys gone rape seed oil?
Speaker 2 (01:44):
Yet? Good? Good, good point. I've been talking about the team, go.
Speaker 1 (01:50):
With with the missus, go with it.
Speaker 2 (01:51):
Yeah, well no, actually I did the cooking, so but
the team at worked, you know, go with the cheap oil,
put a splash of extra vergin, and then you've kind
of cut yourself a cheap olive oil substitute. Well, I
don't know if it's a fact. I just made it up,
but it seems to work. I mean, you know, Olive
the extra Virgin's got all the flavor and it's priced,
it's slightly more expensive, but you use a tiny bit
(02:12):
of that with some cheaper, cheaper oils. But you know,
that's crazy. That's down to you know, that's down to
what's what's happened in Spain and Italy and it's it's
one of those shocks, and it's an interesting shot because
it's one of those things that reminds us that we
need to get our own domestic inflation down because we
have no control over the stuff that goes on around
the world. You know, we could we could see petrol
(02:33):
prices spike again, something bad could or probably will happen
in the world in the next year or so. So
you know, we can't rely on just you know, global
prices going our way. We've we've kind of got to
get it under control in New Zealand and yeah, hopefully
we're nearly there.
Speaker 1 (02:50):
Yeah. Now, I know what you're going to say, Liam,
You're going to say, hither you always talk smack about
Adrian or but Liam, this flip flop is credibility damaging,
isn't it.
Speaker 2 (03:00):
Well, yeah, I thought about this. I mean, look, I
was I was a little confused like everyone about the
September you know that that September forecast, And I guess
it was trying to talk tough to you know, to
get get to put the fear of God, I get
into the everyone in the economy, and it kind of worked,
and maybe it works too well. But look, it's it's
(03:20):
it's it's all a bit of a strategic game. All
the talking and speculating and what the markets do. In
the end, you've got to look at the results. And so, Okay,
there's a fair bit of criticism for inflation going too high,
that's that's one thing. But if you can get inflation
back in its blocks by the end of the year,
that's that's a result. So yeah, you know why what
(03:44):
they played it really tough and then they've softened it.
Speaker 1 (03:46):
No one they were going to it's the problem, no no.
Speaker 2 (03:48):
No one, No one believed it was going to.
Speaker 1 (03:50):
So they didn't have credibility. So you basically you agree
with me, they didn't have credibility.
Speaker 2 (03:54):
Well, I think it's part of the game. I don't
know if it's I don't know if that, you know,
like again, what what counts is? Then if you're going
to argue the credibility line, I would say.
Speaker 1 (04:02):
The most important thing is the inflation.
Speaker 2 (04:05):
Yeah, so that is a fair argument. That is around
what happened over the last year and a half. I mean,
you can talk about the global context and all that
sort of stuff, but it was well outside the box,
you know. But can they get it back down? That
will be that will be I mean, I think that'll
be a victory if they can get it back down
this year and they can keep unemployment under five something
(04:25):
like that, five point three, you know. Yep, But that's
that's me. Yep. You can have an opinion. That's that's
why it's.
Speaker 1 (04:32):
Allowed on opinion, and I appreciate that your opinion is
a positive opinion. Liam. Thank you, Liam Dan the Heralds
Business editor at large. For more from Hither duplessy Alan Drive,
listen live to news talks. It'd be from four pm weekdays,
or follow the podcast on iHeartRadio.
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