CPI figures highlight global economic challenges

Further increases in consumer prices are a reminder of the current global economic challenges and the need for responsible fiscal policy in New Zealand, Grant Robertson said today.

The Consumer Price Index released by Stats NZ today showed a 1.8 percent increase in prices over the March quarter, taking the annual inflation rate to 6.9 percent.

“These are challenging times for the global economy with significant increases in food and fuel prices hitting all nations. Inflation is at a 40-year-high of 8.5 percent in the United States and a 30-year high of 7 percent in the United Kingdom. Chinese ports have been shut for long periods, adding to supply chain disruptions. New Zealand cannot be immune to these challenges and the government can’t control the price of food or petrol,” Grant Robertson said.

“But the reality is that for many families the pressure from these high prices are real. We are well positioned to respond to this challenge. Unemployment at a record low, exports are up and the economy is growing and helping keep a lid on debt, which is well below those of the countries we compare ourselves with.

“This strong base means we have eased the pressure on New Zealanders. We’ve taken immediate action on fuel prices by cutting fuel excise by 25 cents a litre saving up to $17 a refill and halving public transport fares. We’ve provided significant support to families, seniors and students and the Winter Energy Payment kicks in from 1 May.

“We are also focused on how we can get to the root causes of some price increases. We are committed to taking action to boost competition in the New Zealand grocery market to ensure Kiwis get a fair price. We are also moving to reduce our dependence on oil by decarbonising our transport fleet, through initiatives like the Clean Car Discount.

“There are no silver bullets for dealing with a situation like this. The Reserve Bank has the job of managing inflation in our system, and they are using their tools to try to bring it back into the target range of 1-3 percent over the medium term. Most economists are now forecasting for inflation to peak in the second quarter of the year and then start coming back down.

“We are continuing to keep a careful, balanced approach to our future spending. There are always more calls for spending than we have the money to be able to meet. So we are keeping our focus on meeting the core needs in health, education, housing, and investing in the skills, infrastructure and industries we need to grow higher paying jobs.

“Our economic recovery is gaining momentum. We are reopening to tourists and workers as part of the next step on that journey. The Prime Minister is leading a number of trade missions to reconnect with key trading partners to support our economic rebuild. There’s more to do, but we’re heading in the right direction and I am focused on taking a balanced approach to invest sustainably in New Zealand’s long-term prosperity while carefully managing our spending,” Grant Robertson said.