Finance Minister Nicola Willis said that inflation figures have shown the impact of the global oil price shock, while reinforcing the Government’s prudent response to global volatility.
Stats NZ’s Consumer Price Index showed inflation was 4.1 percent in the 12 months to the end of June. By far the biggest contributor was the increases to petrol and diesel, at 27.5 percent and 71 percent respectively.
Stats NZ reported that without changes in petrol and diesel prices, annual inflation would have been 2.9 percent, within the Reserve Bank's target range for inflation.
“Families have felt the impact of the conflict in the Middle East when filling up their cars. Higher global oil prices drove much of this quarter’s inflation increase, rather than a broad surge in prices across the whole economy,” said Willis.
“There are encouraging numbers in this release, with annual food price inflation falling from 4 percent to 2.8 percent. Annual rent increases were only 0.5 percent across the year, the lowest for almost 25 years.”
Willis added that this data underscored the need for continued fiscal discipline, that New Zealand is not immune to global shocks, and that the government must focus on what it can control.
“For our Government, that means making careful choices, restraining government spending, and avoiding decisions that would add significant pressure to inflation. Rather than a blanket, costly response that risks fuelling further inflation, we have delivered targeted, temporary, and timely support for the New Zealanders under the most pressure from the higher fuel prices.”
Willis said that taking this approach has enabled the government to support people through a short-term shock without undermining the progress made in New Zealand’s economic recovery.
Despite the conflict in the Middle East, New Zealand’s economy is set to grow 2.7 percent on average every year for the next four years, creating 220,000 jobs.
Wages are expected to grow faster than prices over that period, which is ultimately how the government can make life more affordable for New Zealanders in the long term.
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