Inflation in New Zealand highest in 32 years

Data released by Statistics New Zealand today (April 21) shows that the consumer price index in the first quarter of 2022 recorded the strongest increase in the past 32 years.

The main factor driving inflation is the sudden increase in real estate prices, including construction costs and house rents.

Customers wait outside a fast food restaurant in Wellington, New Zealand. (Photo: Bloomberg)

Mr. Aaron Beck, a spokesman for Statistics New Zealand, said that “kiwi land” is increasing housing construction activity, to address the long-standing shortage. However, problems with the supply chain of materials and labor, related to the COVID-19 epidemic, have caused construction costs to skyrocket.

According to Mr. Beck, construction companies are facing many supply chain problems, higher labor costs, while demand skyrockets. These factors have pushed the cost of building a new home up by more than 18 percent over the past 12 months, far outstripping the decade’s average increase of about 4%.

In addition, New Zealand’s domestic gasoline prices jumped to a record high, also contributing to high inflation.

To reduce the pressure of living costs, last month, the New Zealand Government decided to reduce the excise tax on petroleum products within 3 months, specifically reducing NZD 25 cents/liter of petrol; at the same time, 50% reduction of public transport fares for people.

Finance Secretary Grant Robertson said the conflict in Ukraine is causing many difficulties for the world economy, pushing food and fuel prices to new highs, directly putting pressure on the cost of living for people. global population and New Zealand.

ANZ bank forecasts that this country’s inflation in 2022 will continue to rise to a record high of 7.4%. While ASB bank assessed the inflation outlook at 7.3%.

Minister Robertson assessed that New Zealand’s inflation is likely to peak in the second quarter of 2022, then start a downward cycle.

To cope with the situation of high inflation exceeding the threshold, from October 2021, the Reserve Bank of New Zealand (Central Bank – RBNZ) has started to raise the basic interest rate from 0.25% to 1.5 % to the present time. The RBNZ also implemented many monetary tightening measures to soon bring inflation back within the target range of 1-3%.

Despite recording a high inflation figure, but compared to some other developed countries, New Zealand’s inflation is still below average. Statistics from the Organization for Economic Co-operation and Development show that the average inflation in this bloc as of February 2022 was 7.7%, with the US at 8.5% and the UK at 7%.

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