Inflation was 1.6% in the last quarter, 4% annually, the highest in 13 years.
Petrol is driving inflation. By itself petrol accounted for a 1.2% increase. Food is the other big increase, also accounting for a 1.2% and that is itself being driven by international oil prices. The price of oil is beyond our control and it is only going to keep going up. The only way to stop the rising price of petrol from continuing to eat up our wages is to use less petrol. It’s as simple as that. Government can lead the way by building up public transport and rail freight infrastructure.
Seeing as peak oil is driving inflation and their is nothing that monetary policy can do to fight that, there is no reason for the Reserve Bank not to bring down interest rates now. Domestic inflation is actually very low. Strip out food and petrol price increases that are coming from overseas and inflation was just 1.6%. So inflation within New Zealand is not a problem but growth is – high interest rates have helped tip us into recession.
It’s time the Reserve Bank stopped strangling New Zealand with high interest rates when the problem is coming from overseas. The only result is to weaken New Zealand’s economy when it needs to be strong. Stop punishing Kiwis for a problem they didn’t create. Lower interest rates.