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.

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Episode Transcript

Speaker 1 (00:00):
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
Infometrics about it earlier. It was a little bit of
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, leam.

Speaker 2 (00:16):
Yeah, I'm not here to cheer you up.

Speaker 1 (00:17):
Sorry, what's the gloomy you're bringing at me?

Speaker 2 (00:19):
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. But and the coffee prices, yeah, coffee, chocolate,
all the good things. But what the reason that the

(00:41):
economists have confidence that inflation isn't coming back to haunt
us unfortunately, is because the economy is gone.

Speaker 1 (00:47):
We're all going to get pounders.

Speaker 2 (00:48):
Trade war struggling, yeah, yeah, and so you look at
some of the stuff I read the Infometrics piece. Obviously
A and Z this week as well had a piece
saying they now think that the OCO will have to
go to two point five, which is about fifty basis
points lower than they had said previously. And you know
the sense that the thing about the A n Z

(01:09):
one is that they hadn't even factored in. They're not
factoring in the fallout from the trade wars yet, So.

Speaker 1 (01:15):
No, this is just how crappy our recovery is.

Speaker 2 (01:18):
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 that finally had this recovery going,
and now to have this big shock to global confidence.

(01:41):
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 go fifty basis points
in May, because we kind of need to get ahead
of the curve before for you know, another gloomy winter. Yes, but.

Speaker 1 (02:01):
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 ye
sit tight?

Speaker 2 (02:09):
Yeah, I thought about that. I mean May eight, So
we've got a while. I think I think it's five
weeks or thereabout by that.

Speaker 1 (02:15):
You know.

Speaker 2 (02:15):
Look, and I hope I'm wrong. I hope things go
really well from here. Yeah. 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 1 (02:25):
But okay, so here 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 2 (02:43):
Yeah, He's paused various things, and he could but but
he doesn't really care about our economy. So no, and
so but.

Speaker 1 (02:50):
If the war, if the wall economy really takes a hammering,
it affects their economy, doesn't It does.

Speaker 2 (02:56):
But we are very vulnerable to China. And look, you know,
good things can 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 you're
supposed to spend more. So you know, I'm reserving judgment

(03:17):
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.

Speaker 1 (03:24):
But what it's doing to our heads as well right now, the.

Speaker 2 (03:27):
Chaos and uncertainty is making it very difficult for this
recovery to get going.

Speaker 1 (03:31):
Do you reckon it's gone to Nichola Willis's head.

Speaker 2 (03:33):
Yet, 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 again it's I mean.

Speaker 1 (03:51):
She doesn't need to loosen it. They're loose already. The
woman spends more than Grant robertson.

Speaker 2 (03:54):
Yeah, but you know, like it is still a constraint
on growth and if you know, 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 worst since twenty two thousand
and nine. So they're talking about global growth coming down

(04:16):
to very very 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 1 (04:27):
But someone says, you're just depressed because of daylight saving
in winter.

Speaker 2 (04:30):
Yeah, I mean, and the weather is lousy, that's right,
And we got a stork, so that's always a risk.

Speaker 1 (04:35):
Thanks, Ully, I'm appreciated.

Speaker 2 (04:37):
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