sign up log in
Want to go ad-free? Find out how, here.

Searing domestic inflation has the financial markets now picking a 75-point rise to the Official Cash Rate from the Reserve Bank next month and a peak OCR of over 5%

Business / news
Searing domestic inflation has the financial markets now picking a 75-point rise to the Official Cash Rate from the Reserve Bank next month and a peak OCR of over 5%
[updated]
inflation inferno

Latest inflation figures have provided a very nasty surprise, making wholesale interest rates leap and prompting forecasts of much bigger Reserve Bank interest rate hikes. 

Significant mortgage rate rises are inevitable sooner rather than later.

Inflation has fallen very slightly to 7.2% for the year to September, down from the 32-year high of 7.3% hit in June.

But the result, which featured 2.2% inflation in the September quarter, is much higher than any market forecasts. And it very probably means the Reserve Bank will hit us with a 75 basis point rise to the Official Cash Rate (currently at 3.5%) in November. See Stats NZ media release here.

Wholesale interest rate markets boiled after the unpleasant inflation shock, with the two-year 'swap' rates for example surging by 19 basis points. A 75-point OCR rise next month is now about 85% priced-into rates while the markets now also pricing a better than 50-50 chance of ANOTHER 75 point rise in February.

At current wholesale market pricing, a peak OCR next year of around 5.3% is now being seen.

With wholesale rates at such levels, significant mortgage rate rises will already be being contemplated by the major banks. Expect these very soon.

After the inflation figures were released by Stats NZ on Tuesday, ASB economists were the first out of the blocks to officially pick a 75 point OCR rise next month - with two more 50 point rises early next year, giving a peak OCR of some 5.25%.

ANZ economists, who had previously had a market leading OCR peak pick of 4.75% for the middle of next year, also quickly changed their call, and now expect the RBNZ to hike the OCR by 75 points in both November and February before stopping to take stock.

"This takes the OCR to a peak of 5% by February (previously 4.75% by May). Both hikes are contingent on global financial markets keeping it together," ANZ economist Finn Robinson and chief economist Sharon Zollner said.

"Such large moves so late in the cycle are risky, no question, and could well turn out to be a mistake. But today’s data gives the RBNZ little choice. They are further behind the inflation game than thought,"

BNZ head of research Stephen Toplis is also now picking a 75 pointer for November, but says this "may be the straw that well and truly breaks the camel’s back".

"We remain forecasting a 25 point hike at the [RBNZ's] February Monetary Policy Statement and we believe that the Bank [RBNZ] will use this Statement to explain why it has done enough. This should be relatively easy as it will be clear by then that the economy is headed into recession.

"Whatever the outcome we do not believe that current market pricing of a 5.4% terminal cash rate is sustainable. At rates approaching anywhere near that level the economy would be well and truly buried," Toplis said.

ASB senior economist Mark Smith said there is still "a large bow wave of inflationary pressure in place", with high rates of core and non-tradable (domestic) inflation still in evidence and the risk of these outcomes becoming increasingly entrenched.

"Inflation is much too high. Increasingly restrictive OCR settings are required," Smith said.

Kiwibank economists actually raised their forecast of the OCR likely peak twice during the morning, first from 4.0% to 4.50% and then to 5.0%. They also now expect a 75 point rise next month.

"Today’s report will be like a red rag to an inflation fighting bull. We have no choice but to expect a more aggressive RBNZ response. The CPI report was a shocker, to put it politely," Kiwibank chief economist Jarrod Kerr said.

The RBNZ had picked just 1.4% inflation for the quarter and an annual rate of 6.4%, although this pick was made back in August. Major bank economists with more recent economic data to go on had annual inflation picks in the 6.5% to 6.9% range. 

So, the actual figures are a big shock.

The main culprit in the surprisingly high overall inflation numbers is domestically (IE in New Zealand) generated inflation, which hit an all-time high of 6.6%. That's a resounding shock and shows how hot inflationary pressures are within the country.

The 6.6% domestic inflation figure is the highest since Stats NZ started that data series in 2000.

As of June the figure had stood at 6.3%, so, the rise has been quite significant, as well as totally unexpected.

Stats NZ said construction of new dwellings, rentals for housing, and ready-to-eat food were the biggest contributors to the movement.

Imported, or so-called 'tradeable' inflation (things like oil prices) fell due to lower oil prices. Although, at 8.1%, down from 8.7% in June, it didn't fall anything like as much as expected.

Stats NZ said higher prices for petrol, vegetables, and international air transport were the biggest contributors to the tradeable movement.

But the big thing for us is the 'non-tradeable' figure, the domestically generated inflation.

That's trouble for interest rates.

The RBNZ has little control over imported inflation, but can try to rein in domestically generated inflation through hiking the Official Cash Rate. Already this year the OCR has been hiked by a record (for a calendar year) 275 basis points to 3.50%, with more to come in the final rate review for the year on November 23.

At its last rate review earlier in the month, the RBNZ pointedly mentioned that it had seriously considered raising the OCR by 75 points before finally deciding to raise it 50 points. Since those remarks were made market speculation had increased - even before the inflation figures came out - that the RBNZ will next time hike by 75 points. 

Now a 75-pointer is seen as a racing certainty. The only real question is whether the RBNZ might even start to lean towards 100?

Consumer prices index

Select chart tabs

index
index
index
index

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

272 Comments

I'll bet Mr Hargreaves had to put this piece together quickly!

Most, maybe all, reporters would have had their "Inflation fell to 6.4%, as expected, ..." lines ready to go.

Up
21

I'm sure the copy editor had their work cut out for them too, removing all the expletives...

Up
18

Cameron Bagrie was right , just hours ago , that taming the inflation beast was gonna be no easy task , and will take longer than most people expect  .... well said , good sir !

Up
14

Cameron Bagrie was right 

Bang on, one of the very few I pay serious attention to.

Up
17

Back in the day I watched Cam predict OCR moves correctly 17 times in a row.....      he is always on the money.

 

Up
6

...............AND now when the need is, to raise OCR by 1% if not 1.25% Mr Orr will raise it by 0.75% 

Up
37

Exactly - this just shows their rate of OCR increase thus far has been too slow.

Would also be prudent to pencil another meeting in between Nov and Feb - why would the RBNZ be happy to sit on the sidelines for so long while inflation burns?

Up
17

December 22 inflation announcement is going to be interesting.

I thought inflation had peaked with June 22, but if the December quarter is above 1.5% it will be a new YoY record.

RBNZ might need to be on deck ready to respond...

Up
4

RBNZ on deck ! Rofl. More like in bed as always.

Up
2

C👏o👏r👏r👏u👏p👏t👏i👏o👏n👏.

Up
11

Most mortgages are on fixed therefore the effects of rises aren't immediate. There is a massive lag. However, confidence is now shot. Hence the lack of transactions

Up
3

I worked with Cam in Treasury back in the 90s when he was just a whipper snapper.

Now he's all growed up - proud of him.

Up
8

The main driver for the 7.2 per cent annual inflation to the September 2022 quarter was housing and household utilities due to rising prices for construction, rentals for housing, and local authority rates. To be expected considering these factors.  Watch next announcement.

Up
3

I heard that rents were 4 percent on average, which is below the rate of inflation. But it depends where you live.

Up
3

SHOCK.....and Orr.

Up
2

Good news for house hunters?

Up
4

For those hunting in a year or so. Far too much delusion out there still.

Up
50

Then the question becomes how should house hunters protect their deposit in the interim?

Up
9

Probably TD's which are paying better now. Or high dividend value stocks if willing to take a bit more risk. 

Up
7

If they still have their jobs in the massive recession that is on the horizon. 

Up
14

I'm not so certain of this massive recession. Firstly, ordinary homeowners with a sensible mortgage aren't likely to hurt badly even at 7-8% interest rates. Secondly, of the small group that do need to cut back significantly as rates rise, I think most will primarily cut down on luxury goods and services like eating out. The former are mostly imports that contribute nothing to our economy, the latter will be propped up by returning tourists. Where are the job losses coming from? Maybe construction but right now that still has a backlog...

Up
0

I'm not disagreeing entirely with you, however, the market is decided, right now, by the marginal buyer or seller.

Up
4

The coming recession will be harsher than most have experienced.  The construction “backlog” will quickly vapourise as people finally work out that much higher construction costs and much lower property values make projects uneconomic. Regardless of level of exposure to higher interest rates.   Construction has been a large employer, so will contribute significantly to rising unemployment and in turn the downward recessionary spiral.  The silver lining after a few years of pain will be sensible house prices again.  

Up
3

Correct except for the very last sentence. Interest rates will offset any falls and if new construction stops completely house prices will begin to rise again.

Up
0

Carlos/HGWR - You appear to believe the law of supply/demand has been abolished - breaking news - its hasn't and won't be - price is the elastic and it isn't broken.

Up
0

Coupled with the large downsizing of government employees after the election, less spending starting to show mid-2023 and downturn in hospitality and retail

Up
0

Coupled with the large downsizing of government employees after the election

They just shift to being contractors on higher pay, like every other National term.

Up
1

100% Still drunk at the bar.

Up
5

If they like to pay higher interest rates.

Up
8

Sure.  The question is whether house prices will fall to the extent that new buyers have lower repayments than they otherwise would have.

Even in Auckland, where house prices have fallen a significant amount, I haven't had the feeling that the market was in any sort of panic.  If we see some more significant rate increases, and this latest inflation figure certainly points towards that, then I think we could see a real change in the market.

 

Up
6

Once the panic starts, it will be like the spawning of the salmon in Canada.   

Everyone trying to swim upstream all at once... bashing themselves on rocks... launching themselves at waterfalls... blindly panicking and flailing around... gasping for air.       

There will be a switch from famine to feast for property bears.   You will be able to just stand on the side of the stream and hook bargains up at will.

Up
14

I am not sure anyone will be able to determine what is a bargain for ages this time round.

Days of 'house prices double every 10 yrs' are gone. At the mo its looking more like (accounting for inflation and exchange rates) 'house prices halve every year'.

This will play out over a much longer  period..  as did the 10 year boom. Buying too early - by thinking a bargain price is somehow related to 'a certain percentage drop from the peak' will be the mistake. The ocr will be very high for a long time and the new normal median price will be waay lower for much longer. 

Up
13

House prices are still holding...TILL NOW

Up
11

Ah you think inflation is your ally? You merely adopted inflation. I was born in it, molded by it. I didn't see price stability until I was already a man, by then it was nothing to me but blinding!

Up
6

Haha, I think the people who were born into it are too old to recognise the quote?

Up
8

All but seals a 75 basis point rise in November. Crazy hot number - interest rates are only going one way and its the opposite way of the housing market

Up
37

... anything less than 75 bp's would show that the RBNZ just don't get it  ...

Up
23

Anything less than 100 bps increase would show that the RBNZ are still not getting it. Anything less than 75 bps should trigger calls for an immediate resignation of the entire board of the RBNZ.

Up
25

Anything less than 0.75% would give the NZ$ a real good kicking

Up
6

Have you seen the qualifications of the people on the RBNZ Board?  Not getting anything would be a practical certainty.  Maybe another karakia would help?

Up
5

So .... we can stop blaming Putin , now ?

... and turn the spotlight onto Adrian Orr & Grant Robertson ... where the fault lies ... 

Up
55

That's exactly it. EVERYONE else is being blamed; Putin, "greedy" supermarkets, "greedy" oil companies, etc.

Fault lies at the door of Adrian Brrr and Grant Robrrrrrrtson.

Up
31

It’s not a shock. It’s a reality check. Some time ago Finance Minister Robertson explained to Hoskings  that.  “ most people think inflation will peak at just over 7%.” Didn’t go on to say what he personally thought though and Hoskings didn’t press him on that either as he should have. But Robertson will now claim he was right of course. What he  will not admit to though, is the sustained damage of inflation compounding firstly in building up to, and secondly then running for six months over 7%. Old Rufus Dawes was right, way back when he taught us in the sixties. Governments  that print money wilfully, willy nilly and without any serious investment disciplines or objectives,  can expect to eventually get a crippling load of inflation dumped right smack bang  on their doorstep. And here we all are now.

Up
20

Hey Foxy : we should run a poll , which happens first : Kiwibuild gets to 100 000 houses built ... or ... the RBNZ gets inflation back into the target 1-3 % band ...

... could be a long wait ... I'm going with the RB  ... if a new government replaces the guv'nor with someone more capable ...

Up
9

Where are we going to find a government that would put in a Reserve Bank governor who'll put rates up higher and faster? Or print less money to support property?

There doesn't seem to be a major party in parliament of that ilk.

Up
15

Neither the government nor the Reserve Bank "print money" to lend on housing, That's the job of the commercial banks and monetary policy is all about controlling that function.

Up
3

Not yet, but after this election we can make it so. Major parties only get major by votes, so let us all vote on policy next year and not on people or the red or blue. We have this chance to reshape New Zealand for the better and the greater diversity we have, the more differing opinions at the top, the sooner we can dismantle the historical red and blue pendulum.

Up
8

Does chris have Dons phone No?

Up
0

GBH it reminds of that kids’  old party game. Pin the tail on the donkey. In other words a whole bunch of blindfolded overfed kids, desperately trying to find the rear end of an ass.

Up
5

I was wrong , Mr F : Robbo has pinned the tail on Putin ! ... plus the cost of building materials  ... and the usual waffle about " supply chain issues " ...

Robbo is teflon coated : nothing sticks to that guy  ... certainly not the truth ...

Up
2

My wife is a government employee. Today, she received a pay rise of 18%, backdated. It was one of those pay equity adjustments. We will take the money, but any assertion that JA and Co have clean skins on this is ludicrous. Worst PM and Government in living memory 

Up
25

First you complained about the rebate on your Tesla, then it was the cost of living payment, now its this. Stop whining and be grateful 😊

Up
15

... be grateful for the worst PM & government in living memory ? .... Hell no !

Up
9

Retired Poppy, can you not see the irony of a Government that says it focuses on the poor, making people like my household more wealthy while 10,000 extra mouths need food assistance? They are economic vandals. Splashing cash everywhere like a drunk sailor on pay day. 

Up
10

National are promising to stick by their irresponsible tax cuts here; 

https://www.newshub.co.nz/home/politics/2022/10/cost-of-living-crisis-c…

Please feel free to share your solutions together with details of a Political Party that has a remote chance of winning at the next election. Utopia is calling your name. 

Up
9

Then think outside National and Labour as we all should be doing this election as we all should be doing. 

Up
8

I'm curious about Rex's views on this too. 

If this is the worse PM and Government in loving memory, based on their proposed policies, is National the worse opposition in loving memory and would Luscious and current National party be an even worse PM and Government than Labour? 

Up
7

As it was a pay equity issue and being a government department,I guess they treat everyone the same...even the 'poorly paid' within her division were probably balanced out as well.

Up
4

You are either not very old or have a poor memory or a Nat  Or a combination thereof 

Up
6

The moment they put blame on others but themselves, should be asked to resign but who will as all including politicians are on the same power trip.

Up
4

You mean it's Trumps fault right?

Yeah Trumps fault. That'll work.

Probably working with Putin in secret though. 

 

Up
5

Time to go full Elizabeth Warren and blame “corporate greed”. Let the comcom administer a code of conduct for every industry. That should do it.

Up
1

So .... we can stop blaming Putin , now ?

I do believe that Robbo has just done exactly that! Absolute buffoon.  

Up
2

Wrong.It is obviously our slavish adherence to the Shakespearian colonial economic model. When the new improved Aotearoian history is invented and written up, those of us fluent in Te Reo will be able to read what actually happened here, and will be able to take advantage of conditions as they crop up. Now to check my family tree to confirm that Mahuta whanau link for my next job.

Up
11

This did not age well from yesterday's article:

The Reserve Bank (RBNZ), which is straining every sinew to dampen the fires by overseeing a whole series of jumbo sized interest rate hikes, is picking an annual rate of 6.4% and a quarterly rate of 1.4%.

Up
17

Come on, be fair. That was 22 whole hours ago!

Up
13

Typo at their end.

Hopefully IRD carried on tracking down bank account details for the next round of COL payments. And maybe cut a few off that probably shouldn't have received the payment.

Up
3

The main culprit is the surprisingly high overall inflation numbers is domestically (IE in New Zealand) generated inflation, which hit an all-time high of 6.6%

Damnit, now we can't blame everything on Putin. I guess we hope for a new wave of COVID-19 in New Zealand so we can go back to blaming that?

Up
14

Well that didn't take long. Over at The Guardian, Edward Miller, a researcher and policy analyst at New Zealand's First Union, seems to be blaming both at once:

All of this should underscore to the Reserve Bank that for the most part we’re not dealing with a demand-driven inflation situation but rather a supply-side jolt, from a combination of Russia’s invasion of Ukraine and post-Covid supply chain shocks.

Up
3

Jesus. These people are embarrassing.

Up
1

Surely it is verboten to say that the dirty inflation existed before Putin's rescue mission of Russian speaking people in Eastern Ukraine, or that the energy shock in the west was due to sanctions. /s

Up
3

Never doubt the Prophet. All Hail the Prophet!

Up
24

I heard he wants all his followers to join him in a commune he's setting up just outside of Gore. He's mixing up a big batch of Raro to share around.

Up
5

He's done his homework then. Gore had the cheapest 91 one could find South of ChCh last week.  $2.40/l.

All hail the Prophet (and the Gaspy app.....)

Up
6

Remember the teaching of The Prophet from the Scroll.

It is NOT about High Interest Rates to Fight Inflation. It IS about High Inflation to Justify High Interest Rates. Ponder on this before the Seal is Broken on the Second Scroll. 

Up
7

LOL

Up
2

I can't wait to hear Grant Robinson's word salad and spin claiming domestic inflation is not his doing.

'You can fool some of the people some of the time'

Up
13

"But you can't fool Robertson about where the pie shop is, any of the time"

Up
9

You're 100 % correct ! ... Robbo blamed : 1 War in Ukraine , 2 building material costs , 3 supply chain issues ...

Up
6

The first step in fixing a problem, is to admit you have a problem.  Denial is not just a river in Egypt.

Up
4

Offset the money you will lose selling your home by uising No Agent: www.noagent.co.nz

Up
8

Be quick!

Up
11

I hope you got the bossmans permission to spruik your business on here?

Up
10

Great.

Then you'll only be down 20% instead of 23%.

Admittedly it would probably give some pleasure not paying a real estate agent but still......it's hardly going to save your investment.

As I understand it real estate is not a particularly liquid asset.

So you probably aren't going to sell diddley squat for awhile except with a massive hair cut. 

Even then.....outside people who don't care about the money, why would anyone buy a house right now?

Up
4

No amount of wishful thinking, spruiking and crossing of appendages is going to make our problems magically disappear and allow a return to the 'good ol days'. 

The longer it takes some people to accept our new reality, the worse it will be for them.  

Up
17

Reminds me of chatting with another boomer at a dinner about all the shite going down.

Me: Lots of shite going down

Other boomer: Yeeeeeah, but you know we've always adapted, we'll adapt...

Me: Yes, by having a lower standard of living

Other boomer: .......Oh....

Up
10

Just shows you that Bank economists know jack....may as well have a chocolate wheel. Talk your way out of these Grant and Cindy. The whip from the tail on some sectors (construction, retail etc) after all these interest rate raises about to happen is going to be something.

Up
6

Yet another case of jawboning amateurs paid professional salaries misreading the facts. Anyone who goes grocery shopping knows the cpi is meaningless. Time for Orr to do a ocr rise with 150 and stop trying to pretend he knows what hes been doing .

 

Up
23

I agree, the OCR must go up to 5% before end of the year. No question about it. I am now convinced that we need an emergency OCR raise by 100 bps TODAY, and another 50 bps raise next month.  

Up
13

Yup. I’ve been saying for a while that we need either positive real rates or demand destruction to get inflation back under control, and todays number seem to support this.

The inaction from the RBNZ (and central banks globally) has painted us into a corner where it’s a very real scenario that rates will have to remain high for 2-3 years even as the economy tanks and unemployment rises.

The end-game of the “central bank bubble” was always inevitable - it looking increasingly plausible this might be it

Up
7

Tony Alexander and Ashley Church.  🤡🤡🤡🤡🤡🤡

Up
44

Yep, just wait for their catch phrase " I follow the data" so have adjusted my projections.

Up
13

Robbo & Orr are village idiots compared to TA & AC.

Up
7

Many people believe that a weather vane points in the wind's direction of travel, rather than where it's coming from.

The wind coming out of Church and Alexander is much the same. It may appear to be blowing in one direction, but in reality it's the complete opposite.

Up
8

... stand upwind then , if St Ashley & Torpedo Tony are letting one go ?

Up
6

I was about to write "the wind coming out of their mouths", but then I realised that's not where most of it is coming from...

Up
8

You can guarantee these two have sold most of their investments. If so many of us on here could see this sh** show was coming last year you can be sure these two were aware as well. The clowns are the people who still believe the B/s from so called experts.

Up
3

Unless or until we get the OCR above the CPI reading, the figures could conceivably keep rising, as each less than necessary OCR rise just gets factored into the next reading. An Inflation/OCR Spiral, in other words.

This needs to be sorted by the RBNZ, fast and hard.

Mucking about with incremental OCR rises that lag the economy could be worse than not going hard.

Up
22

The longer they wait, the slower they act, the higher the OCR peak will have to be. If they act now and aggressively, the OCR peak might be able to set at 5.5% or 6%, otherwise it might well have to go up to 7%. 

Up
14

Agreed.

I fail to see how you can get inflation down unless your rates are higher than your inflation rate.

Of course inflation could still stay high, with idiots playing pissing games in Ukraine and magical zero covid thinking in China. And what the he'll are Japan thinking. Japan has to blow up soon right?

I think if ce tral bankers do the right things stagflation is pretty likely.

But will they?

I don't see any leadership out there. You know doing the tough things because they are right, rather than doing what the focus groups and polling tells you is politically expedient.

There seem to be a lot more Gideon Bonos than Paul Voelkers.

In which case I propose we put the seagull on the nz trillion dollar note. Seems fitting.

Up
2

Increasing interest rates will do nothing, the inflation is a result of reckless government spending, until that is reigned in inflation will rip. 

Up
3

This is a nasty, nasty surprise. I did not expect such worrying numbers, and this should cause a significant change to the current timid monetary stance of the RBNZ.

Inflation is truly getting out of control, and the domestic component is shocking. We must have an emergency OCR rise by at least 100 bps NOW, and another 50 bps raise next month. Until early this morning I thought we could wait until next month for such a 100 bps raise, but today's numbers are a clear indication that inflation is rampant and increasing. The RBNZ must act TODAY.   

The OCR must be 5% before end of the year, and it will have to go up to between 5.5% to 6% by mid next year at the very least, possibly higher. Not acting timely and aggressively will cause the OCR peak to go even higher.  

Up
23

But what we will get is 75bps and then a 3 month holiday for the summer by Mr Orr and Co.

Up
12

I see a lot of government expenditure in certain sectors, the OCR is not and never will be a silver bullet. It needs a coordinated approach on fiscal and monetary policy.. in addition, to some additional micro economic policy to have any chance .. likelihood of that happening?

Up
3

It will never happen with Labour. But I did predict by the time election rolls around our economy will be in real trouble as will people's finance's who are over leveraged. 

Up
6

The trouble is, what next? The opposition that might replace them are all-in on property speculation, so will they be prepared to deal with real economic solutions that are not just trying to prop up speculative wealth even more?

Up
11

Don't forget mass immigration of low income workers to suppress wages and supply cannon fodder for the rental market...

Up
10

The current turmoil is best explained as a combination of an unprecedented supply crunch and artificially high demand.

Migration might bring some relief with wage competition and gradual increases in production but having more labour supply won't itself solve issues in food, housing and energy.

Up
3

I wonder how many Labour party Resignations there will be pre, and post election. Brexit scenario after the vote - BAIL!

Up
3

Exactly, ask them to show us an example of inflation being tamed without interest rates being higher than the inflation rate.

Up
7

Yes, like Turkey (sarc).  But even the Fed  is saying that rates are now neutral yet still effectively they are negative real rates.  Have they all forgotten about the Taylor Rule?

Up
2

Inflation would be tamed well before the OCR gets to 7.2%. 

Up
0

Can you show us an example of inflation being tamed without interest rates being higher than the inflation rate?

Up
4

Not good...

 

Up
3

... ungood ... very very ungood ... much ungooder than we predicted  ... darn ... 

Up
7

Don't really understand this distinction of 'oil prices' being 'tradeable'. The increased fuel costs will be a big contributor to the 'non-tradeable' inflation also.

Up
8

You are so right, i was surprised with the picking of lower by all the commentators yesterday and thought it must be because of the stat collation and time series changes that they were so confident. Didn't think it would reflect reality. I own a couple of Accounting firm's, every client has increased their prices and their wages so could tell you easily domestic inflation was imbedded based on the last qtrs. figures. My surprise is the stats actually reflect that.

 

 

Up
8

Fuel has gone down a lot since June. The fact that inflation is this high even with fuel going down so much is surprising. 

Up
9

Diesel prices are still horrendous compared to historical levels and that feeds into EVERYTHING,domestic and international.

You can't blame Mr Orr & Robbo for that...Ms Ardern may be a saint,but she can't turn water into diesel yet..

https://www.1news.co.nz/2022/10/15/diesel-price-soars-past-petrol-just-….

Global events, like the OPEC+ alliance of oil-exporting countries' decision to cut production earlier this month and a fuel refinery workers' strike in France, have raised the price of petroleum products including both diesel and petrol.However, the reason why diesel now costs more than petrol can be traced to both the recent post-pandemic travel boom, and the arrival of the harvest season north of the equator."The northern hemisphere is using a lot of diesel right now because it's used in all the agricultural machinery and heavy transport trucks," Collins said."Post-Covid flights have taken off. Well, [jet fuel] is just kerosene."He notes during the refining process, crude oil is broken down. Some of that extract, known as middle distillate, can be used to make either kerosene or diesel, but not both.The end result - the recent demand for jet fuel has also squeezed the price of diesel.But while those at the pump may be feeling the pain right now, he says the situation is only going to get worse."It's just the beginning. Next year's going to be really scary," he said.

Up
11

My wife, a government employee got an 18% pay rise today. Love the money, detest the PM and Government as economic vandals. We spent the COL in Paris. Not sure where we will spend the last pay increase, but it will likely be overseas again. Doing our bit to reduce NZ Domestic demand. 

Up
7

Under a National led Government she would have got 30%. The absolute incompetence of our Labour Government must be keeping you awake all night 😳

Up
9

Well,spend up large,when Mr Seymour is deputy PM,he apparently is going to 'clean out' government employees...someone has to pay for your tax cuts...

And as an airline employee...thank you so much for returning us to profitability...you don't have to be in the dairy industry to 'milk it'

Up
6

If it is the same 18% pay rise my wife got today it was well and truly deserved (well in my wife's case anyway). 

Up
7

Don't let facts get in the way of his humble brag and opportunity to carry on his incessant digging at Labour while Cindy lives rent free in his head.  

Up
10

Somewhat hypocritical...

Up
0

Have a look at the charts at the end of the article. It looks like Tradable inflation is peaked and on the way down. But all the effects from higher fuel prices is still flowing through into the local economy, driving up prices for everything here. 

Up
1

and once they go up, very rare in a small market with little competition for them to go back down even if fuel costs go down... companies are making up for 2 lost years 

Up
7

They don’t need to go down, but they do need to stop going up. 

Up
4

correct, but only if wages are keeping up

Up
1

Bringing CPI back into a comfortable range means cheaper TVs and shoes imported from Asia to offset higher costs of food, healthcare and housing in NZ.

The toll these perverse outcomes have taken over the last couple of decades on quality of life, economic productivity and wellbeing here in NZ holds zero weight in central bank policymaking.

Up
3

This outcome was not surprising to me, besides local prices that bewilder me at supermarket shopping trips, I've been following the doom and gloom articles about the world economy for weeks now, the upshot being that every country is having the same problem led mostly by the fed in the US. Strange times are upon us.

Up
7

We are just feeling the effects of the wage rises and costs as they filter through the economy, did they really think closing off the border, getting record wage rises, increasing number of people employed by government was not going to have an impact.

A huge number of government jobs only create demand, they don't create anything that people want, they remove people from producing something that may be sold or exported.

We have all heard of good debt and bad debt, well we have good jobs and bad jobs, and bad jobs are those jobs that don't make the boat go faster, to take a phrase from the America's cup.

Up
8

Well said.

Although you probably could have stopped at "do they think...."

No.

They do not.

Nor have they ever done.

Up
0

How many more employed by the govt?

Versus how many receiving handouts to businesses, property and wages over the last couple of years? My property received far larger handouts than the equivalent of my wage subsidy, in fairness.

Up
7

Oh !!!!

What a Fall from 7.3% to 7.2%

Glass Full : Though it has fallen by 0.1% only but has fallen so are on right track and will slowly reach the target by 2024 at this speed - Well done Mr Orr

Up
6

It's actually fallen by only .08%

Up
4

alas the main issue is tthe change in balance to NZ created inflation from global factors --  this is really really bad news 

 

Up
1

The RBNZ has a lot of mahi to do from here.  Any Central Bank fighting inflation needs their cash rate above the rate of inflation.  What highlights how much the RBNZ is lagging in the fight is the difference between the two.  It reached peak negative in March 2022 at -5.9% (OCR - annual CPI) and THEN they started with their 50bps hikes versus the more sedate 3 x 25bps hikes they had been doing prior to that.  They need to do a lot more work and there is not much left of the runway before Christmas.  Markets will lift pricing closer to a 75bps hike for November which is a full MPS https://www.rbnz.govt.nz/news-and-events/events/2022/november/monetary-… be sure to be tuned in for this as it might even be more exiting that a meeting between Wayne Brown and Jacinda Ardern (maybe that was an exaggeration)

Up
3

What mahi? They don't do much more than talk nonsense gobble de guuk to maintain the status quo.

Up
3

"The 6.6% domestic inflation figure is the highest since Stats NZ started that data series in 2000"

Will be interested to see how the FM fib a yarn and give a positive twist.

Up
12

We're doomed, doomed i tell ya. RIP domestic asset prices.

Up
12

Wow! Considering the removal of September 2021 quarter and lower petrol prices, this is a shocker. 0.75% now guaranteed. Bad season for fresh food isn’t helping but can’t be the only cause. 

Up
10

That's exactly correct. This number is way worse than it looks. The fact we had the big jump from the Sep 21 quarter drop out of these figures was a large part of the reason everyone expected a decline in today's reading. But we've gone and generated almost as much inflation lately as we did back in Sep 21. It's pucker up time if you have a large mortgage debt that's resetting soon. Life is about to get really expensive. 

Up
4

RIP housing market. 

Up
15

30% falls by December…..2023!!!!….. guaranteed :)

Up
2

Its already -28% in North Shore.  

Up
5

Not according to the most respected measure, the HPI. As I told you before, that is down 10.4% for the North Shore.

Up
4

It is better to repent and accept the teachings of The Prophet.  It is never too late.

He tried to warn all of you about the greatest rug pull in human history and he was crucified for it.

Up
11

The North Shore will hold up, spent most of my life there so if you have to live in Auckland its one of the few places to be.

Up
1

What's wrong with the rest of Auckland?  Is this a racialist thing?

Up
4

I guess if you cannot afford to live there you can always try playing the race card instead.

Up
2

There isn't that much difference between Glenfield and Massey.

Up
3

Yes Northcote Shopping Centre is quite the mecca!

Up
4

Which Property Broker said that Interest rates are likely to have less impact on the housing market than many here believe?

For the sake of many peoples finances, he'd better be right😳

When it was obvious to many how cheap money held valuations of everything aloft, its such poor and short sighted advice to dish out in the first place😬

Rates have risen much more than many with skin in the game, would dare to believe. House prices falls have left them scrambling for answers in the stars🌟 or worse, Tony Alexander 🦍

Up
12

And people thought Covid was an exceptional economic event and that now we’d be getting back to normal! This inflation is much more significant than Covid. Partly caused by covid, but I reckon it would have happened regardless. 

Up
2

Covid is a virus. The stupid response to covid caused this - shutting down the global economy, obscene money-printing etc.

Up
8

We so desperately needed a balanced view on our response to Covid… democratic governments fined it irresistible turning down chance to wield unrivalled power ‘in war times’

Up
2

Fiat systems are inherently flawed to begin with.

And recessions are lagging after the event that causes them.

Up
1

Still at negative real OCR !

Domestic inflation is stuck.

Up
7

I'm assuming that's 7.29%.......

Up
1

I'd like to predict now that when the next inflation stat is published it will also be

much higher than economists and the RBNZ expected

 

Credibility in tatters!

Up
6

At some stage it will go the other way and they will predict and battle much higher inflation than what is occurring. It looks like that could be a lot later than I ever imagined. 

Up
1

Where are all the commenters that used to bang on about asset prices should be part of the CPI? Put those in now and we’d be sweet!

Up
5

If they were in we’d never be in this position in the first place!

Up
2

The OCR will not tame inflation on its own. Will an increasing OCR cause the international price of oil to drop? No. Will it cause the compliance costs of NZ business to drop? No. Will it make importing many of the basic consumer goods we consume cheaper? No. Is it easy for journalists to write about. Yes.

Up
1

Bang on.  I don’t know why so many commenters accept the OCR as being effective.  I cant see any evidence that it is:

- house building and house renting are driving inflation.  So the “solution” is to increase interest rates that developers have to pay, thereby reducing housing supply further, thereby increasing house prices more?  Beggars belief.

- same with food costs.  How does increasing cost of finance to businesses help them increase food supply?  Would seem to do the direct opposite!

If we were really interested in inflation I think we should be focussing on:

- proper regulation to ensure competition in all markets

- funding ASSISTANCE to those industries that have capacity issues driving inflation.

Up
1

interesting that the numbers were up up for house construction, rental accommodation, and take out food.

house construction linked to supply chain disruption, and take out food is just passing the wholesale inflation to the end consumer.

rental increases is directly related to the actions of the central banks increasing the costs of owning a rental property via interest rates. so the rbnz raising rates is in effect raising rents.

Up
2

"ASB economists now see 5.25% OCR next year as searing domestic inflation of 6.6% has kept overall inflation much higher than economists and the RBNZ expected:

Why cant for once RBNZ be proactive instead of trying to do catch up - LEAST REGRET is missing.

Now the real estate agents marketing strategy will be to Buy now before interest rate goes up but hopefully if the rise in interest rate matches the fall in house price, it is better to wait.

Up
8

ASB economists are as about as likely to have a realistic prediction as Grant Robertson is of seeing his own phallus

Up
2

HouseMouse, what are your predictions now? I was with you that the RBNZ would overcook their response (or perhaps already had), I’m prepared to admit when I’m wrong. They probably will eventually, but maybe that will be years away? Or will they just keep raising the OCR until the eventual destruction of the economy and demand, that could occur mid next year still, although not that many reviews until then. 

Up
7

I have recently admitted I was wrong Jimbo. I didn’t think ‘high’ inflation would be this persistent, I thought we would be in recession by now and experiencing demand destruction, and inflation would be moderate at worst. Obviously I underestimated lag effects, the hot money has been hanging around longer than I expected.

So who knows.

Although I do think at some point the economy will weaken significantly and inflation will start falling significantly. Will that be mid/late 2023, 2024, or later?

Up
6

You are prepared to admit when you are wrong. But HouseMouse will never do that. He still does not believe banks are selling 7% Mortgages.

Enjoy whats below.

by HouseMouse | 10th Sep 22, 4:57pm

Well, you know my thoughts on economists :)

However current and former bank economists must know a thing or two about this, and most of them seem to think fixed rates won't go much higher than 5%, even if the OCR goes to 4%.

Up

0

by Fitzgerald | 10th Sep 22, 5:29pm

Mate, if you can look at that laundry list of massive, global, disruptive inflationary pressures and STILL believe the economists, then there is nothing more to say.

https://www.interest.co.nz/property/117562/overall-sales-rate-barfoot-thompsons-latest-auctions-was-23

Up
6

This seems to be like a national sport here on interest.co.nz; make 50,000 wild predictions, and then when one of them happens to come true, go off on a self-congratulatory tirade about how amazing you are while ignoring the other 49,999 predictions you got completely wrong.

Up
13

Wow you are special. 
I have admitted several times my errors. Will you admit yours when fixed interest rates are not 7% before  December 2022, and house prices are not down 30%?

your spouting under several guises is annoying spam. What is even more surprising is how much people here seem to like it.

Up
5

More false accusations HouseMouse. I only have one account, I know you have 2.  The prophecy from The Prophet was for 7% Interest Rates this year, Guaranteed . Prophecy Confirmed.  If you feel he said otherwise then prove yourself, but you cant.

North shore down 28% already HouseMouse. See if you can get that corrected if you differ.

https://www.stuff.co.nz/life-style/homed/real-estate/130137138/house-pr…

HouseMouse you claim to admit your errors. Well The Prophet is awaiting to here you apologise and also congratulate him. 

Up
7

A 100 pointer would sharpen the collective mind!

Up
14

Very possible now! Pleased I fixed my mortgage yesterday, swap rates and mortgage rates will move on this news even before the RBNZ. 

Up
4

Do you mind if I ask what you fixed at and for what period?

Just doing the exercise myself now

Up
1

It was actually only a part of our mortgage that we will pay off in just over a year so I took the 1 year rate. The big part of our mortgage comes up in July next year which I thought would be on the downward slope but that looks unlikely now. 
I wouldn’t take advice from anyone TBH, the future is very much a lottery right now. I’m sure all the DGMs will say fix for 5 years (or sell), they could be right but either is a big call if they are not. 

Up
2

Thanks for that. Yeah I don't tend to take direct advice from people, more just throw it in the mix and make my own decisions. Everyones circumstances are different. I am leaning towards the certainty of a longer term and can get 4 or 5 years at 5.85%. Which doesn't seem to bad at the moment with the outlook.

Up
1

We ought to be at 5.00 % now ... even a 100 pointer would still leave us 50 points short ...

Up
4

How is it possible that with the 1&2 year swaps at pretty much 5%, that we can have 1&2 fixed mortgages at 5.5% and 5.75%?

Could it be that the Reserve Bank's FLP is working against the rises in the OCR?

What will happen to mortgage interest rates when the program ends in December?

Up
7

its all part of Grants master plan, he is in this with Orr. The OCR will go way higher, pain will be felt by all, the lag from the raises taking effect in the real economy will hit like a freight train out of control. He will then annouce tax cuts, people will look at him as the great saviour, and then call a snap election hoping people forget the pain they are in with the short term euphoria of the tax cuts.

Up
3

... good theory ... except ... changes in the OCR usually take 6 to 12 months to ripple through the finance system ... and the revenge ... ooops , Freudian slip on my part , sorry ... the election is just 12 months away ... 

Up
2

And pray tell what any of the opposition parties have offered up as iron clad proposals to turn around the economy in a way that no other global economy has managed? Frying pan and fire come to mind here...

Up
7

It’s a good time to be in opposition. We are a pessimistic country, we don’t want solutions from our politicians we just want to hear all the problems. 

Up
3

As they always say,we don't vote a government in,we vote one out...

Up
3

They wont need to offer anything, people will be looking for blood, someone to pay for there pain, and that will be the government.

Up
3

Your prayers are answered : ACT , & TOP have ... no one else ... 

Up
2

ACT...crikey,people bang on about this government having no experience...there is a reason you only see Seymour and occasionally Brooke...after that there is the gun lady...then can anyone name an ACT party candidate?The talent pool is very shallow...but I look forward to the new Utopia that NZ will become...

As for TOP...the average "hard working kiwi" won't be happy when they here about a land tax..."that's my money" they are stealing...

Up
1

I mean, if you actually look at the ACT candidates they are experienced in the portfolios that they are a spokesperson for.  Whether you think they're talented or not is your opinion.  

  • E.g. Chris Baillie (22 years as a teacher, 14 years as a Police Officer, owns a small business)  Spokesperson for Small Business, Education, Police
  • Simon Court.  (23 years as a Civil and Environmental Engineer)  Spokesperson for Environment, Climate Change, Infrastructure, Transport, Local Gov)
  • Mark Cameron (Farmer), Spokesperson for Primary Industry, Forestry, Regional Economic Development, Fisheries
  • Damien Smith (Ex-Banker, corporate finance, has consulted to Vero/Tower insurance, has an MBA) Spokesperson for Commerce, Revenue, Statistics
  • Nicole McKee (Ran a firearms safety training business/4 time NZ shooting champion/12 years as a legal secretary) - Spokesperson for Veterans, Justice, Firearms.  
Up
12

Why actually look when you can just arbitrarily dismiss?

Up
4

They look to have some useful people there, yeah. Why have the nuttier sounding ones been the only ones heard?

Up
2

The "average hard working kiwi" is year by year not one that owns land ... so they will likely gain some traction as the millennials and younger decide they want to put an X in a box - still largely outnumbered by boomers for the current time being

Up
0

What happened in Sri Lanka and what is happening in UK, are they in isolation or indication of things to come.

Will RBNZ do an emergency meeting or will still idle away the time.

No country will be immune and earlier they act the better as may feel the pain but short pain is better as sharper is unavoidable.

Now is the time to act aggresively and think out of the traditional box, just as they did in April/May of 2020.

Up
8

We definitely don't want them thinking outside the box. The last big idea was giving everyone free money and pretending it would last forever. Look how that ended up.

Now, they have to continue to raise rates, and not listen to the pain of the people that thought they had taken advantage of a once-in-a-lifetime handout of free money. Now is the time to save what we have got before we lose everything.

The RBNZ governor will not be there next year, and neither will be Labour government. National and Act cannot fix the mess, the mess is too big. The cycle will turn naturally in a few years and until then National/Act will blame Labour for it.

Up
2

The mess was created by both the major parties of Natbour. And the giving everyone free money - especially the billions upon billions to property - was very much trying to protect the mess those major parties had created through their silly economic policy of the "wealth effect".

Up
8

That may be so, however, Labour have really taken a blowtorch to it, and roughly doubled the price of housing in a few years (whilst apparently trying to make housing more affordable). Anyhoo, the most recent and largest screwup in living memory is now being unwound. We are all paying, some more than others. I have a mortgage, but it is fixed in the 3s for 5 years, so I will not feel the pain from housing and interest rates. Many will. I will suffer to a certain extent as my share portfolio is exposed, but, luckily most of it is outside NZ, it will come back over time. and I don't have to pay interest to anyone as a result of those investments.

Up
1

I agree. Their biggest mistake was going John Key 2.0 and turning around from purporting to address the housing crisis to "everyone wants the value of their primary asset to keep going up", abandoning CGT, and protecting property from hard times. They made progress on tenancy laws and (eventually) some taxation, but overall were pretty National.

I'm also pretty fortunate. Small mortgage principal and payment, and fixed for some years.

Up
6

This round of price rises has little to do with our government or what it has done or not done. In fact, if anything, our governments have set up this country to weather this international economic tornado better than a lot out there, NZ has been trading money in money out across the border for years unlike the US for instance which has accumulated huge debts and is now in desperate straights. If the world's money is no longer pinned  to the US dollar, the US will wilt like a flower cut of by the knife while we in NZ keep on. And it's getting dicey if the US dollar can survive, people want to go back to gold, a more dependable thing.

Up
1

Well, this was utterly predictable. 

All the wailing and gnashing of teeth about how inflation MUST be falling any day now because demand destruction... when we haven't seen ANY demand destruction. Retail sales continue to rise, hospo booming, employment at record lows. What demand destruction?

Imagine how surprised they'll be when supply chains and inventory normalise and inflation keeps rising anyway, because it's not about supply chains and inventory. We collectively magicked untold trillions of 'wealth' into existence without increasing physical supply one bit. The only way to restore order is to destroy the nominal value of that wealth, which is likely, or somehow massively increase productivity, which is not.

Up
12

Debt based economies.. In the early phase of an interest raising cycle,,, people are trying to increase their ability to ward off increased costs. Trying to get wage increases, trying to off set wage increases with price rises for goods and sevices. Until we kill demand local inflation isnt coming down.

The currency may weaken,  i.e. inflationary. Expect the 10 year to hit new highs in the next couple of days. Why should anyone lend the government money at 4.5%, when it is depreciating somewhere over 7%. The RBNZ is blowing in the wind and without significantly higher rates it has control of nothing.

 

Up
4

Mea culpa, mea culpa, mea maxima culpa. I was wrong on where interest rates would go. For a long time I thought that they would not reach 4%. Now? 5% seems almost a certainty and then?

The funny thing is that on a purely personal basis it suits me very well with no debt and lots of cash, but i still think that we face a significant global recession.

Up
8

Reporting minor variations of the numbrr is pointless hairsplitting. 

But we already know it"s terrible at 6 - 7 - 8.  Hasn't changed. 

Up
2

No surprise at all, after RBNZ's prediction it would be much lower.

Up
4

Sounds like the RBNZ raises have not done much, perhaps they are ineffective against the kind of inflation we are experiencing - which is my suspicion. So we may see more increases which will certainly make things more difficult for people and get them to lessen spending but will that get inflation under control? I doubt it. 

Up
1

Yawn I have been calling for 100bps rises since I cannot remember when (well I can because everyone was laughing at me) and finally everyone is jumping up and down yelling for a 100bps rise. With the massive gap between November and the following review in February it's only logical to go 100. They let inflation rip, the only conclusion is that it was deliberate.

Up
4

Just because you were right that does not make your original logic correct, there is always an element of luck in future predictions. I went down to the casino last week and put $10 on red and won, so should Adrian Orr have had the same foresight as me and put the economy on the table?

Up
1

We are not paying these guys multiple six figure incomes to treat the economy like a Casino.

Up
6

... I'm not betting on the reds after the next election ... 

Up
2

the greens??

Up
1

That’s right, we want them to be cautious. Record high OCR increases back to back are not cautious. 

Up
1

Based on their actions, that statement is debatable

Up
2

Less like a casino, and more like a ponzi scheme. Fine as long as you got in early. 

Up
5

Look for election panic and the big big stupid bribe mid next year.  It will be with your money.  Evil and cynical. 

My pick is cancellation of all student loan debt.   But Grant Afterpay might pick other options. 

Up
6

No, it will be with future generations money as always.  Whatever wrapper they put around it, it will appear on the national balance sheet as a govt debt that will get paid down (with interest) by the taxpayers that are currently at the earlier stages of their careers. 

Up
1

Tax cuts for property speculators is one of the proposals so far...

Up
9

Rick,I think you meant to say tax cuts for "hard working kiwi mum & dad investors..."

Up
6

Hah, I stand corrected. I did indeed forget the newspeak.

Up
4

Stats NZ should really be ramping up these releases to monthly at the moment because we probably would have already had the needed .75% increase if the RBNZ had more recent data. 

Up
6

Once again I ask...why do they make the OCR decision a week or two BEFORE they get the CPI data?

Up
8

Its all very odd isn't it. Why use data that is 4 months out of date when you can use data that is one month out of date. 

I really think they should be asking stats to do this monthly in these exceptional circumstances. 

Up
1

Rates bill - promised 9% average raise for this year, came in at 16% increase!!!

Environment Southland rates - promised 5% average increase for this year, came in at 21% increase!!!

How do they get away with this, are there not laws against false advertising.

Note the environment rates came out just after the elections!!!

Inflation has a long way to go yet, inflation in the service industry is just taking off.

Up
7

More fool you for living down there...we elected Mr Brown up here in AKL,we have no more road cones,all bicyles have been confiscated,I can park my SUV where ever I want to now...that's if I don't catch the CRL into town,that opened yesterday,early and under budget...

Up
6

And my unknown Mobile phone blackspot is now working..but I never noticed??

Up
1

lol

 

Up
0

... not sure how your Environment Southland fee rose 21 % in one year , but I'm confident that if you ask them they'll find a way to link it to the war in Ukraine ... 

Putin's fault ...

Up
2

OK Waldof ..sit down before you blow a artery

Up
3

Looks like you are well above average, you should be very pleased. 

Up
0

Everyone agrees that 7.2% is bad but no one realise how bad the number is when it is comming after raising OCR from 0.25% to 3.5%.

To control,  RBNZ has no option of going soft (Yes raising 0.5% is timid in current situation though many may feel otherwise) but RBNZ should go all out as this data is the final confirmation, leaving no room for Mr Orr to manipulate and escape.

David, this data after so called massive rise in OCR ( though should be sitting in 4s) is more dangerous than 7.3% earlier. Need seperate article focusing on it in interest.co.nz as why 7.2% is worse earlier than 7.3%.

Up
8

Genuine chance he goes +100 in November given the large gap until February's meeting. Orr is the kind of personality who can act outside normal envelopes if he feels the need to (remember his random 50bps cut in 2018).

If he does, it'll be wheeling out the howitzer to blow himself away as the economic wheels start to fall off in Q1.

Up
1

So many people have got a mortgage and paid way over value for a house, a 900k mortgage was $850 a week when rates were 3% now at 7% will be around $1400. With inflation at 7.2% and people living week to week once people have to refinance defaults will start to occur,over the next few years we are going to see house price crash on steroids.Anyone who has purchased a property in last four years will more than likely be in negative equity.

Up
13

People who purchased with excessive leverage ..... will be in negitive equity, the rest of use will just be giving some equity back to the same place it came from........

Up
6

That is because  house prices are proportional to interest rates. So record low interest rates, resulted in a record high house price bubble.  However when rates rose in the last cycle, house prices didn't really drop . The price to build is still rising a lot. 

 

Banks were stress testing people at a lower rate that 7% in some case, and I don't know if they also factored in inflation as well. 

Up
3

Real Estate can kiss its a^$ goodbye

Up
8

I mean how much of the tradable inflation is actually domestically produced? In reality what does NZ produce that doesn’t require imported goods? It’s very simplistic to suggest tradable and non-tradable inflation are not intricately linked.

Up
2

Fuel subsidy comes off in January, watch inflation then....

Up
7

100% guaranteed that will be extended for a year as election next year.

Politicians will be politicians be it Jacinda or anyone from any party - Power is Supreme

Up
7

Only one problem, the money to fund it comes from left overs of the Small Business Cashflow Loan Scheme, and money remaining in the COVID Support Payment allocation. This will run dry by 31 January. They would need to fund an extension via new debt..... more rampaging inflation!! 

Up
7

Everything is moving at break neck speed now, but our the RBNZ's only real way of controlling inflation has a very long lag.

  Is somethings going to blow up? 

Up
3

This is what happens when you have a political science major become the Minister of Finance.  All politics + ZERO finance education = One big mess

 

Well done Robertson.  You sure make National look amazing, and that's saying a lot.

 

-7

Up
8

Its ok, he will be on TV telling the sheeples on what a good position NZ is in...compared to Sri Lanka maybe. Wonder what the  next Aussie inlfation rate will be, if it drops a lot more than ours, Grant won't be anywhere to be seen for comment.

Up
5

Lots of comments blaming one person for the state inflation in NZ and Globe...once again - quoting nktokyo this morning

" Think critically about each issue FFS."

Up
12

Lots of comments blaming one person for the state inflation in NZ and Globe...once again - quoting nktokyo this morning

Emotions running high 

Up
4

You're right.  We shouldn't blame the people leading this country and making decisions on our behalf.  We should blame ourselves for living in this god forsaken country.

Shame on all of you!

 

-7

Up
1

Grant Robertson gave the world inflation. I bet the Europeans are especially pissed with their 20% dosage. Who would have thought he was so influential. 

Up
6

Yes, I agree.  I think with all the wasteful spending he's been doing and driving the NZ budget to such a hard deficit, this is a textbook model that other countries can learn from if they want chaos!  Truly textbook!

 

-7

Up
0

To be fair, economic science is just as much a sham as political science and there seems to be an equal amount of both cult followers 'in charge'.

Up
2

Don't worry, team transitory will be along shortly to tell us how inflation is all an aberration and we need to go very slowly and carefully on rate rises.

Up
3

its not a shock --- anyone in the real world already knows this  -  2 coffees and two slices $23 --  breakfast for 4 $130 ---   deisal  $2.70+      All food  significantly up  ---     all utilities power water gas etc  all up well above inflation -- insurances 12% +   

only those with vested interests in drip feeding the bad and increasingly bad news have said it had peaked --  check out bank property experts -- every 4 weeks they revise their property fall forecast   drip drip drip 

Up
6

Real Estate lobbying started in full swing.

Email from Ray White - East Auckland to all on their mailing list :

Good morning,

Compliments of Team.........., we like to extend an invitation to Tony Alexander's "Passion & Property" LIVE STREAM, this Wednesday 19th October 2022; 6pm to 7:30pm. 

Don't miss out - click on links below.

Kind Regards,

Up
6

Can you post the link.  I want to attend

Up
2

And people still call Tony Alexander an “independent economist”. What a joke

Up
10

My name for him is much shorter.  Only four letters in fact.

Up
3

Join us on Wednesday the 19th of October and see economics speaker and writer - Tony Alexander cover topics such as why mortgage rates have peaked, what the current influences are within the market, and why the forces that limit house prices have declined.

Up
3

That is hilarious! I wonder if he will call in sick...

You can't blame him if he just has an eternal optimism for property prices, it has been correct for so long. But this feels a little more corrupt than that.

It seems like a bad move on his part, surely the end of any career as a proper economist and how long will the property spruikers prop up his salary once it all goes even more pear-shaped. 

Up
6

https://www.instagram.com/reel/CjzP5nZO9VV/?igshid=YmMyMTA2M2Y=
 

‘Tony the comb’ is now getting angry and saying people are stupid to wait for another 5% fall in value 

Up
2

Shock and Orr

Up
1

Huge inflation shock - now we wait for Orr

Why we wait for Mr Orr......what is the expectation ?

Up
2

It is fairly obvious inflation is way higher than possibly even these figures show. I don't know if the CPI even takes into account shrinkflation which is happening as well.  Lack of competition also means that companies are putting up prices because they can do it with a good excuse. Maybe they should stop the FLP now.  

Up
1

I imagine it does take shrinkflation into account, they have a fixed basket of goods and size must be part of the calculation. 

Up
0

Quote of the day by Robertson: "The Government will continue to carefully target spending". 

Up
3

I dont see OCR going past 4.25 this year or next ...Next bump possibly the last , too much risk pushing it higher. I cant see the Fed wanting to push past 4.25 this or next year either...more a case of wait and see . Nice everybody picking blood on the dance floor but crashing markets is a prohibited activity that no government or financial institution would want happening. Obstacles that might push it past 4.25 next year fuel prices and wage inflation, fingers crossed everyones got that rise they were after already. What bank forecasts an OCR figure that is not sustainable ? Where is the logic in pumping out such numbers . I think the RB is in the zone, it could have done with an extra .25bps last round but I think its actually making in roads . 

Up
1

Hmm, I wonder if this has to do with the ridiculous unnecessary spending the gov't has used?  Nah, it must be the inflation rate.  It's Orr's fault, right Robertson? 

 

-7

Up
2

It's incredible.  The NZ Government has spent so much money that inflation has popped up all around the world.  

On a side note, how's your investment plans coming along?  Have you managed to leverage any equity out of your first home into an investment property yet?  Or is that why you're on here venting lol....

Up
2

That would be relevant if anyone claimed we single-handedly caused inflation in other countries. Can't see anyone doing that here.  

But how many times in a row have RBNZ missed their own forecasts? They're literally the ones who are making the decisions here and they keep getting this wrong. Given that Orr serves at Robertson's pleasure, and given there's been no consequences for these repeated misses (and given the now-likelihood of it impacting our financial stability), one can only assume he is quite happy with the situation. 

Up
0

Adrian Orr has a fixed term contract that runs finishes next year.  Are you privy to the performance criteria/KPI's in his contract?  

Are you suggesting that Robertson should fire Adrian Orr?  If not, then all you're doing is drawing an extremely long bow by assuming Robertson is sitting idle with glee at Orr's poor performance.  The usual partisan stretch.  

Up
0

Oh, now I have to have a copy of his contract before I can offer up any meaningful critique? Spare me the every-widening net of excuses for not holding RBNZ accountable in a manner that would allow the public to have some confidence that it actually mattered to someone.

If you want to write that off as a 'partisan stretch' without a hint of self-awareness or irony then please feel free to do so.

Up
1

You're implying Robertson is happy with Orr's performance because you personally haven't seen any consequences for his failings.  That's the partisan stretch.  You have no clue what's happening behind the scenes in Orr's employment concerns, conveniently using that obscurity to push your partisan critique of Robertson.  

Given that the RBNZ is supposed to be independent and all.....

Up
0

Check my other post.  I just gave an update on my situation!  I didn't end up buying another property as I had left.  But I did pay off everything since the interest rate is going higher and my USD currency was getting stronger recently.  It was too good to pass up the buying opportunity.  Now I have a good rental property in NZ and a potential future settlement when I retired :)

 

Hope your plans are working out well NZdan, you seem very frustrated and happy that economies and livilihoods are crashing...  Hope you are doing ok....

Up
0

I responded to that post but I thought I would paste my response here.

I might also add that changing the USD to NZD AND then putting it into what looks to be, in the medium to near time, a declining asset doesn't appear to be that intelligent. You could have swapped to USD and simply bought US Treasuries - returns of 4+% backed by the US government. Now (assuming what you say is true), you have an asset denominated in NZD and paying you rent in NZD - which is useless everywhere around the world other than in NZ. And the NZD is currently being pummelled. And then you still want the OCR to be kept at the current levels rather than increased to protect the NZD and the NZ economy. Just wow. Is there some kind of esoteric currency/property play that you are thinking about? 

"Bless your soul LOL. 

1) Your story doesn't sound believable given your past posts and what NZDan has shown in your previous posts. Also, pretty sure you were quite definitive about buying a investment property in your language lol.

2) If your current story is true, you are a real bagholder. You went to pay off your mortgage in full. No wonder you are heavily vested in keeping prices up. Because if prices correct any further, you are (or could be potentially) left holding the bag since you paid off everything in cash. You got the property game wrong dude - you are supposed to let the bank hold the bag and not hold it yourself! And let me guess - if you make your salary overseas, no bank will lend that to you today to buy another house so you cannot remortgage the property to get that cash out. 

You are the true king. You win."

Up
0