Watch video on YouTube here. Watch on our video page here. Bernard Hickey delivers an economic weather report showing inflation expectations are rising. Data from surveys commissioned by the Reserve Bank of New Zealand show 44% of households now expected higher inflation, up from 39% three months ago and 20% at the beginning of the year. They also show businesses now expect inflation in two years of 2.61%, up from expectations the previous quarter for 2.25% inflation.

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11 Comments

by Wally | 25 Nov 09, 11:57am

What the peasants expect....the peasants

What the peasants expect....the peasants will get. A greater than 100% increase in inflation expectation in less than one year...jeez what a rise....Might explain the wave of strikes and disputes going on. Wonder how the fools in the Beehive will convince the peasants to ignore the huge bloated state sector paypacks and accept the reality of falling real incomes for a long long time to come...for the peasants that is, not the fatcats. It'll be a hard task but these politicians are not afraid of the hard work involved in ordering up some new spin for public consumption.

by Grumpy Old Man | 25 Nov 09, 2:47pm

That will have the banks

That will have the banks laughing and rubbing their hands together all the way to the ....

by Nicholas Arrand | 25 Nov 09, 2:50pm

All in one Westpac economics

All in one Westpac economics article! So it will be different this time, if it isn't...

"This country tended to experience "very high" growth in gross domestic product in the years following recession, and there was no reason to suppose this time would be different, (Westpac) economists said.

However, they did acknowledge there were some aspects of the economy that people could point to as being different from the past."

"In the absence of 1970s style supply shocks or late 1980s/early 1990s systemic banking problems, we'd hazard to say that this time will not be different."

by steven | 25 Nov 09, 3:29pm

Depends on who you listen

Depends on who you listen to...

"Yet the outlook is extremely grim "” not according to DFHs like yours truly, but according to the consensus of professional forecasters. Here's what the Philadelphia Fed survey of forecasters says about inflation and unemployment, through 2012 (inflation as measured by personal consumption prices excluding food and energy)"

http://krugman.blogs.nytimes.com/2009/11/24/a-bizarre-complacency/

I guess it can be a bit arguable whether to take out food and energy....in energy's case its described as in-elastic...so an increase in price does not cause a matching drop in consumption...hence is it reasonable to include it? ditto food....but I guess at some stage you end up with nothing left to measure on....

regards

by andy hamilton | 25 Nov 09, 3:34pm

Once again Mr B(ean) will

Once again Mr B(ean) will be behind the inflation curve........

by steven | 25 Nov 09, 3:34pm

"â€œThis country tended to experience

""This country tended to experience "very high" growth in gross domestic product in the years following recession, and there was no reason to suppose this time would be different, (Westpac) economists said."

Yet there are some noticeable comments that this isnt a given (very high growth). I'm pleased that these bank "economists" are writing out their positions so clearly and that we will be able to refer to them by looking back on this site (I assume we can?) to see how they did....

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by Steve Netwriter | 26 Nov 09, 1:25am

Confusing. This report talks about

Confusing.
This report talks about "Inflation" but has a chart of the CPI, which is prices.

Inflation properly relates to money supply, which is indeed continuing to inflate at around 8% per year (M3).

High inflation and low GDP inevitably leads to higher prices as the currency is devalued.

Using the proper definitions (pre neo-classical junk economics) leads to easier understanding.

by Doug | 26 Nov 09, 4:55am

Increases in the cost of

Increases in the cost of energy, food, and housing - juxtaposed against a declining job market, means less disposable income for other consumables. Lower wages and retail sales means less government revenue. Less government revenue means increased government borrowing or budget cuts (or both).
None of this is indicative of a recovery.

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