New Zealand Inflation Reaches 7.3%

Statistics New Zealand reported an inflation increase from 6.9% to 7.3% for the year ending in June, the highest since June 1990 and higher than most economists predicted earlier this year. 

According to Westpac NZ senior economist Satish Ranchhod, two main contributors to the inflation were rising transport and food costs. 

“The high level of inflation isn’t just due to a few specific items. Price pressures have been boiling over in every corner of the economy,” Ranchhod added

Before the Stats NZ report, most economists expected the Reserve Bank of New Zealand (RBNZ) to raise rates by 50 basis points next month. 

However, after the report on Monday, economists said there is a possibility the bank would impose a supersized hike. 

“A 75 bp hike at the August (monetary policy statement) is a very real possibility, particularly if the labor market data on 3 August delivers another hawkish surprise,” the Australian and New Zealand Banking Group (ANZ) said. 

Before the inflation hike, New Zealand enjoyed a decade of inflation kept below 2.5% annually. 

“Forecasters are telling us they expect this is the peak and that we will start to see it slowly come down in the second half of the year. But it will not come down magically to those levels we’ve seen in the past,” Deputy Prime Minister and Finance Minister Grant Robertson said. 

On Sunday, the government announced an extension to cost-saving measures, keeping fuel excise duty, road user charges, and public transport fares at lower prices until January 2023. 

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