January 21, 2025 • 6 mins
There’s a belief we're still yet to reap the benefits of having inflation under control.
Latest Stats NZ figures show the inflation rate for the year to December was 2.2%, unchanged from September.
Inflation is well down on the once-in-a-generation high of 7.3% of just two and a half years ago.
The Herald's Liam Dann told John McDonald we're still yet to see many prices come down.
He says rents are still up for example, but they should be coming down with a struggling property market.
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Speaker 1 (00:06):
You're listening to the Kerry Wood of Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be so in flash and the steady two point
two percent economists had been expected, had been expecting it
to go down. Liam danis with us to go through
the numbers season New se Only Herald's Business editor at
large Limb. Hey, John, are you surprised.
Speaker 3 (00:26):
No, well, perhaps I am. Perhaps I'm pleasantly surprised that
it's coming roughly where when expected, because these days you're
happy if the economists forecasts come in about right. So yeah,
I mean it's two point two. The Reserve Bank thought
it might have been two point one, but I'd seen
some other economists warning that it could be two point three.
(00:46):
So I think the markets and the people that worry
about things like where our interest rates are going are
pretty happy with that. So, you know, it means that
the cost of living is still rising, but it's rising
at the rate that you know, the Reserve Bank's supposed
to keep it at, which is around that two percent mark. Yeah,
(01:07):
hopefully that is good news for those looking to see
some rate cats coming their way in the next month.
Speaker 2 (01:12):
Yeah. The rates are one thing, but you know, when
you compare it to what it was two and a
half years ago, seven point three percent. You'd sort of think, well,
life would You would think possibly life might be feeling
a bit cheaper or less expensive, But it's not. Why
is that?
Speaker 3 (01:25):
Well, it is cumulative. So that's the problem, really, isn't
it is?
Speaker 1 (01:28):
Why?
Speaker 3 (01:29):
You know, you see people feel the cost of living
acutely and it piles on top of itself. So, okay,
we've got it back to a sort of sustainable rate
of growth at around two percent two point two, but
that all of that's piled on top of everything you've
been through for the past past three or four years,
(01:51):
and so you know, not much is coming down. There
was a little bit of relief there with vegetables, which
are still cheaper than they were, but that was that
was really off the back of the terrible weather we
had in twenty twenty three, I think, so, you know,
a little bit of relief there, but generally some of
the other stuff's taking a bit longer. Rents, for example,
(02:13):
that was up four point two percent, and that's you know,
accounted for almost a fifth of the annual increase, so
that's taking a while to come out. I mean that
that should start to come down because you know, obviously
the property markets and the doldrums. But that sort of
thing takes a while, and then you know, already you've
got concerns about some of the imported stuff coming back up.
(02:35):
So oil prices in the last month or so up
a bit, the New Zealand dollar down. That doesn't help
the cost of imports. I think what economists expect to
see is that, you know, we can't control the cost
of imported goods, but the cost of doing things in
the New Zealand economy is continuing to come back down
to neutral or fall in some places. So you know,
(02:56):
that's partly because of the you know, recessionary nature of things.
You know, if you wanted to get some work done
in your house right now, it's probably a bit cheaper
than it was right at the height of the boot
when we had labor shortages and high inflation and things.
So it starts to come back to some sort of normal,
but yeah, you're still you're still paying that that that
cumulative increase still explensive.
Speaker 2 (03:18):
I know a few months ago there was a I
don't know, I won't call it a warning, but there
was a suggestion that if Donald Trump became president again,
that would be bad news for global and flashable. As president, now,
what's your expectation of the impact of that on flash
and globally.
Speaker 3 (03:33):
Yeah, well, it's being watched very very closely and like
literally day by day, so that the very first day
he didn't come out with tariff straight away, so that
was seen as a good news on the inflation front,
so that the stock markets went up and interest rates
came down a bit. But it's still totally you know,
we don't know what he's going to do, do we
(03:53):
And you know, anyone who can guess that's doing pretty well.
And so yeah, the idea would be that if he
does put the big tariffs on and start a trade
war with Canada and so on, then that would put
inflation into the US economy and that would keep their
interest rates up and that would keep their dollar up.
And we've already seen a bit of that in expectation.
That's why the New Zealand dollar has come off, because
(04:16):
the interest rates have stayed up a bit in the
States and their dollar is strong, and so yeah, as
our dollar comes down, that does start to hurt, you know,
what we're paying for imports, So it starts to cost
us there. Although you know, New Zealand is an export economy,
so the low dollar is doing is helping rebalance things
a bit with the dairy farmers getting good, you know,
(04:38):
good good prices for their products at the moment, and
that that actually is probably on balance a good thing
for our economy right now, which is more foreign dollars
coming in.
Speaker 2 (04:49):
Just before we move on, let me share a message
that Ben Is sent in on ninety two ninety two.
Two words. He says, thanks national. How much credit can
the government take for the weapons are at?
Speaker 3 (05:01):
Yeah, I guess the governments will always cop it from
up or down. I mean a lot of it is
out of their control. I mean they have done, you know,
probably the right things in terms of you know, getting
government spending down to some extent. But you know, nobody's
(05:22):
going to thank the Reserve Bank governor because they've have
been through so much pain. But those high interest rates
have really hammered the economy. And that's he's done the
job of bringing inflation back into the band anyway, and
people can debate how much damage has been done along
the way.
Speaker 2 (05:37):
There'll be some debate before we go. Winston Peters was
quoted this week, saying that he puts his youthful looks
down to eating fish three times a week. How soon
is it going to be until salmon is more affordable?
Speaker 3 (05:48):
That's a very good question. I can't I in my lifetime,
I've never seen seafood and fish get cheaper exactly.
Speaker 2 (05:58):
All right, doom and gloom. Hey think you down appreciate it?
Speaker 3 (06:01):
Cool? Cheers.
Speaker 2 (06:02):
That's Lim Dany's, the Herald's business editor at larste thirteen
past eleven.
Speaker 1 (06:07):
For more from Kerrywood and Mornings, listen live to news
Talks at b from nine am weekdays, or follow the
podcast on iHeartRadio.
You're listening to the Kerry Wood of Morning's podcast from
News Talks.
Speaker 2 (00:10):
He'd be so in flash and the steady two point
two percent economists had been expected, had been expecting it
to go down. Liam danis with us to go through
the numbers season New se Only Herald's Business editor at
large Limb. Hey, John, are you surprised.
Speaker 3 (00:26):
No, well, perhaps I am. Perhaps I'm pleasantly surprised that
it's coming roughly where when expected, because these days you're
happy if the economists forecasts come in about right. So yeah,
I mean it's two point two. The Reserve Bank thought
it might have been two point one, but I'd seen
some other economists warning that it could be two point three.
(00:46):
So I think the markets and the people that worry
about things like where our interest rates are going are
pretty happy with that. So, you know, it means that
the cost of living is still rising, but it's rising
at the rate that you know, the Reserve Bank's supposed
to keep it at, which is around that two percent mark. Yeah,
(01:07):
hopefully that is good news for those looking to see
some rate cats coming their way in the next month.
Speaker 2 (01:12):
Yeah. The rates are one thing, but you know, when
you compare it to what it was two and a
half years ago, seven point three percent. You'd sort of think, well,
life would You would think possibly life might be feeling
a bit cheaper or less expensive, But it's not. Why
is that?
Speaker 3 (01:25):
Well, it is cumulative. So that's the problem, really, isn't
it is?
Speaker 1 (01:28):
Why?
Speaker 3 (01:29):
You know, you see people feel the cost of living
acutely and it piles on top of itself. So, okay,
we've got it back to a sort of sustainable rate
of growth at around two percent two point two, but
that all of that's piled on top of everything you've
been through for the past past three or four years,
(01:51):
and so you know, not much is coming down. There
was a little bit of relief there with vegetables, which
are still cheaper than they were, but that was that
was really off the back of the terrible weather we
had in twenty twenty three, I think, so, you know,
a little bit of relief there, but generally some of
the other stuff's taking a bit longer. Rents, for example,
(02:13):
that was up four point two percent, and that's you know,
accounted for almost a fifth of the annual increase, so
that's taking a while to come out. I mean that
that should start to come down because you know, obviously
the property markets and the doldrums. But that sort of
thing takes a while, and then you know, already you've
got concerns about some of the imported stuff coming back up.
(02:35):
So oil prices in the last month or so up
a bit, the New Zealand dollar down. That doesn't help
the cost of imports. I think what economists expect to
see is that, you know, we can't control the cost
of imported goods, but the cost of doing things in
the New Zealand economy is continuing to come back down
to neutral or fall in some places. So you know,
(02:56):
that's partly because of the you know, recessionary nature of things.
You know, if you wanted to get some work done
in your house right now, it's probably a bit cheaper
than it was right at the height of the boot
when we had labor shortages and high inflation and things.
So it starts to come back to some sort of normal,
but yeah, you're still you're still paying that that that
cumulative increase still explensive.
Speaker 2 (03:18):
I know a few months ago there was a I
don't know, I won't call it a warning, but there
was a suggestion that if Donald Trump became president again,
that would be bad news for global and flashable. As president, now,
what's your expectation of the impact of that on flash
and globally.
Speaker 3 (03:33):
Yeah, well, it's being watched very very closely and like
literally day by day, so that the very first day
he didn't come out with tariff straight away, so that
was seen as a good news on the inflation front,
so that the stock markets went up and interest rates
came down a bit. But it's still totally you know,
we don't know what he's going to do, do we
(03:53):
And you know, anyone who can guess that's doing pretty well.
And so yeah, the idea would be that if he
does put the big tariffs on and start a trade
war with Canada and so on, then that would put
inflation into the US economy and that would keep their
interest rates up and that would keep their dollar up.
And we've already seen a bit of that in expectation.
That's why the New Zealand dollar has come off, because
(04:16):
the interest rates have stayed up a bit in the
States and their dollar is strong, and so yeah, as
our dollar comes down, that does start to hurt, you know,
what we're paying for imports, So it starts to cost
us there. Although you know, New Zealand is an export economy,
so the low dollar is doing is helping rebalance things
a bit with the dairy farmers getting good, you know,
(04:38):
good good prices for their products at the moment, and
that that actually is probably on balance a good thing
for our economy right now, which is more foreign dollars
coming in.
Speaker 2 (04:49):
Just before we move on, let me share a message
that Ben Is sent in on ninety two ninety two.
Two words. He says, thanks national. How much credit can
the government take for the weapons are at?
Speaker 3 (05:01):
Yeah, I guess the governments will always cop it from
up or down. I mean a lot of it is
out of their control. I mean they have done, you know,
probably the right things in terms of you know, getting
government spending down to some extent. But you know, nobody's
(05:22):
going to thank the Reserve Bank governor because they've have
been through so much pain. But those high interest rates
have really hammered the economy. And that's he's done the
job of bringing inflation back into the band anyway, and
people can debate how much damage has been done along
the way.
Speaker 2 (05:37):
There'll be some debate before we go. Winston Peters was
quoted this week, saying that he puts his youthful looks
down to eating fish three times a week. How soon
is it going to be until salmon is more affordable?
Speaker 3 (05:48):
That's a very good question. I can't I in my lifetime,
I've never seen seafood and fish get cheaper exactly.
Speaker 2 (05:58):
All right, doom and gloom. Hey think you down appreciate it?
Speaker 3 (06:01):
Cool? Cheers.
Speaker 2 (06:02):
That's Lim Dany's, the Herald's business editor at larste thirteen
past eleven.
Speaker 1 (06:07):
For more from Kerrywood and Mornings, listen live to news
Talks at b from nine am weekdays, or follow the
podcast on iHeartRadio.
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