Economists see inflation possibly dropping below the minimum target of 1% this year, but say it's going to be difficult to even accurately measure it after the disruption of the lockdown

I'm expecting stagflation. Asset prices will deflate but the prices of essential staples will in many cases increase due to supply constraints. This will be particularly acute when the value of the NZD collapses further.

The price of domestic services is irrelevant as noone can access them. However with the wage subsidy and minimum wage there is a critical level below which the price of services can't really drop.

This will all be hidden behind the headline stats, so the RB will insist on throwing more funny money at the problem.

good excuse to raise GST? that will create an inflation bubble.

I'm surprised the CPI isn't up 10%, given the prices that we've all be 'asked' to pay in the supermarkets during Lockdown!

Honestly, we'd all be better off in terms of Predictions, just each buying one a them Cheap Sheep that the farmers can't get killed, dispatching and gutting it ourselves, mangling up a few steaks and flaps for future evening meals, and carefully laying out the Entrails on a flat surface and trying to make something of 'em.....

Chickens might be less messy....

We could take a cue from ANZ's Truck-o-meter and call it the Gut-o-meter.....

It shows how useless the CPI is for measuring inflation.

Inflation may be stable but peoples spending power will have taken a real kicking. I expect that will co-opt most companies into discounting or having a really sharp focus on value.

I think it is going to be deflation for few months. And then things going to be messy with inflation kicking in for short time ( months) then the shock "stagflation". But this all might be going out of window if inflation numbers have treatment like normal.

So we'll drop interest rates to negative and reduce the amount people have to spend...that's surely going to give them the confidence to spend more of their capital!

This will work this time around, surely.

"If the inflation outlook deteriorates further, we expect the RBNZ and the NZ Government to further step up policy stimulus measures. Let’s hope we don’t have to go there.

Thus instead of the central banking narrative that lower rates lead to higher growth, the empirical and verifiable reality is that higher growth leads to higher rates and lower growth leads to lower rates. If rates are the result of growth, they cannot be the cause.

This raises some new questions. Firstly, if it is not interest rates that drive growth, what then? And secondly, why do central banks keep insisting that they are using interest rates as their main monetary policy tool, when this is simply impossible? Recently, central banks have been lowering rates, while proclaiming that this is a measure to stimulate the economy. But the empirically verifiable fact is that they lowered rates, because economic growth has decelerated. Falling growth means interest rates must follow down. And what has been the role of central banks in the growth slowdown preceding the lower rates? We may presume that they had not used their vast powers to engineer economic growth – powers they worked hard to obtain in previous decades, in the form of independence with little meaningful accountability.

I am expecting significant deflation. Particularly in the housing market, where 20% decrease in rents and house prices may likely occur.
The only areas where we are still going to see inflation: council rates and medical costs. Council rates simply because these parasites are subject to no competition nor market forces. Medical costs because there are always many factors at play (including international aspects) contributing to this being an ever-increasing cost.

So what? Interest rates are at all time lows. If inflation continues to be low does any expect the RBNZ to go to negative rates when it’s been ineffective in other countries? Adrian Orr has already indicated that monetary policy is no panacea and that fiscal policy is the key to recovery. All feels a bit irrelevant at the current juncture. It will be relevant again but not today.

if you follow this to its logical conclusion.

Farm exports value could be down %50
Forestry down also %50

Govt income from taxes collapses, but Govt wants to borrow lots to stimulate the economy ,so people can go back to buying cheap imported goods, deficit balloons.

Unemployment cracks %10 and keeps going.

All because the RB wasn't proactive and dropped interest rates to zero.

If we have deflation then we will have to move to negative interest rates. I remember reading Ben Bernanke that during the Great Depression the Fed held interest rates too high and should have gone negative. Deflation will kill the economy.

Inflation needs to be considered in a little more granularity to be meaningful.

~ we must expect rents to go down (increased supply thru new builds, Airbnbs and net immigration)
~ local produce and fish I'd imagine pretty static (duopoly ain't gonna pass on any cost savings to end consumers)
~ energy pretty static (hydro plus low oil price)
~ rates I think we will see central govt cap councils spending to keep increases low single digit (politics)
~ import cost is going to be a function of the FX rate and the decrease in labour cost where those goods are produced ~look at NZD/AUD and NZD/RMB as the main drivers.

Overall though I see mild deflationary pressure driven by Ue and lower domestic demand.

And like Step Up above in this environment I would see very low or negative rates and a continuation of QE to maintain liquidity in the system.

With the price of oil dropping we should see big drops at pump(not yet).Hopefully mortgage rates should come down to sure up housing market. Government should force banks to lower rates considering OCR current rate.

Ask kid to blow/inflate the balloon then observe when the lung capacity has been reached, strong enough breath? - pop the balloon, liked to keep the rubber? - then deflating it the only obvious path. Hence, why..

Adrian Orr should take his oar and and his kayak , paddle into the middle of Lake Pupuke , and gaze at his belly button .............. for some introspection .

The invisible hand of the rational market knows what is going on , and so do most Kiwis , even if they dont understand it .

Other than housing, which is in demand due to immigration and is costly to build , we are faced with falling prices, or zero growth in prices in almost everything else , other than housing .

Maybe Orr will one day soon call the problem we have been facing for a while now and use the D word ..........D-E-F-L-A-T-I-O-N.

He should take us into his confidence , tell us what the problem is , and maybe we would be a little more sympathy for his monumental task

Yep Stagflation. A thing discussed in a text book but stating that Govts would carefully manage things so you will never see it. Don't loose your income, be it Job or rental tenant.