Inflation hit 3-decade high in December quarter, as consumer prices rose 5.9% over the year; Economists fear higher inflation is embedded

Lab has fiddled while the poor and middle class burn under inflation. Their core voting group to boot. I guess they have protected their rental portfolios though. How many does Helen have again...?

Would be interesting to see the true number if housing was properly accounted for.

Why the NZD just lose 0.5%?

Inflation of prices for essentials, will continue to climb. Non-essentials may well tank. We have now hit the global Limits for many things - but energy is the key, and energy underwrites all else.

Buckle up - it's going to be an interesting ride. And of course, putting up interest-rates can cause pain, all the way to collapse of the system - but putting up interest-rates cannot solve scarcity.

Interesting times. So to speak.

I say we blame the unvaccinated for this CPI print. They are our new societal scapecoat.

My anger at the RBNZ has turned to pity. They are obviously out of their depth. Who can they turn to for help?

Oh well, my small govt super monthly payment will finally crank up a notch.

Just a reminder - the CPI is only one of several considerations for the RBNZ, albeit an important one.

The pay freeze/miniscule offers to public sector workers are looking more and more insulting by the quarter...

General wage increases may need to move up from the normal 1.5%! 

Nice picture. My prediction of $3 a liter 98 petrol didn't quite make it for Christmas, got pretty close may take another few months.

Double that and you might be close to the real number. We are stufffed.

Not looking forward to when this hits mortgage rates. Think I read about two-thirds of mortgages are up for renewal this year, that is going to be painful!

Ours is due for renewal next year, so I wonder if rates will have peaked by then or if it will just be the start!

The only ref by jacinda to inflation will be to blame it on covid.

Such a convenient virus.

So those emergency cuts... you know that whole percentage point. Will we be getting that back now? or is it still transitory...?

and even if it does rise, what's the bet deposit rates stay stragely low.

The whole system is an orchestrated scam.

Consumer inflation hit a three-decade high in the December quarter, due to factors both within and outside of New Zealand’s control.

The Consumer Price Index (CPI) rose 5.9% from the December 2020 to the December 2021 quarter, and 1.4% from the September 2021 to the December 2021 quarter, according to Statistics New Zealand.

Government bond curves remain flat on the way to inversion at yield levels considerably below inflation - financial repression reigns over us.

So we printed/spent billions at a time when we never actually had a pandemic in NZ so everyone partied up on cheap $$$ and now that we may well actually have a pandemic in the very near future with Omicron we have nothing left except for massive debt, record inflation, a cooked housing market, a larger than ever gap between the haves and have nots, a hugely under resourced and faltering health system and debilitating cost of living??? Well done NZ 👏 

It looks like the chickens of having an economically illiterate finance minster are coming home to roost.

Transport costs up 15% in a year. Quick put up interest rates, that'll sort it.

Housing costs up over 7% (mainly rent) and landlords planning rent increases of 6% this year on average. Quick put up interest rates and increase landlords' borrowing costs. That'll sort it.

The problem is the interest rate won't resolve a whole bunch of inflationary pressures. I can see Omicron blowing costs out in so many industries.

Hard to believe the vege prices have only risen 14%. Celery at $7.50 a bunch and iceberg lettuces $5.50 -$6 for example. Both in-season

Price increase from our food supplier  ...

From 1st February, 2022 prices will move up across a range of products / price increases range from 9-14%.

It is as expected.. Yes.. But what are we doing about it? Waiting another month to take any action. When it was time to reduce the OCR because rich were going to be impeached, RBNZ did it as an exception very quickly. Now since poor are being affected by inflation, there is no action. This is not a team of 5 million. Only the team of the rich and powerful. Rest all slaves.. 

Seems like it's fudged, at least between 0.1% to 0.3%.

Last time it was just under 5 which is 4.9 and this time it is just under 6 which is 5.9. Don't know how long this cover-up will go. In reality, it is really hurting now whether it is daily commodities or housing.

So, wages rising at 4%?

Raise rates to choke off inflation, will induce recession.

Don't raise rates to reduce inflation, more inflation above wages, causing drop in consumer spending: recession.

Construction costs up 16%

Development in Orewa on Centreway rd canned for this reason this week.

So, rising costs, more supply, less demand, higher borrowing costs, no immigration.

And prices won't fall eh?

15-20% in June-Dec 22

I'm not sure RBNZ have been best served by this policy of only raising in 25bps increments. Inflation is getting a long way ahead of them now and other major banks raising across the OECD will export more inflation making inflation control more difficult.

Not only are we not likely to see a soft landing but we are still gaining altitude. Imagine what it will look like after the next quarter when Omicron inhibits productivity. We need RBNZ action and not just tough talk.

I wonder what inflation really is. This is the most manipulated of stats and is manipulated to understate inflation and beget low interest rates to support the housing ponzi. Rise up NZ the capital led class is stealing your money.

I wonder what the best strategy is to cope with ongoing inflation. Owning your own house seems wise. Keeping your job is probably a good idea too. Keep all the property you do have. Keep some cash reserves or at least liquid assets.

I don't know. Do readers have suggestions?

"Economists are increasingly saying inflation is now embedded and not "transitory". "

Jenee, does it means that many commentators on this website are smarter than Economists as they could read the data and see what was coming.

Fail to understand, how could so many  experts and media fall for false narrative that was been propaganded by Mr Orr and his team supported by lobbyist like ......

HOW COULD THEY FORGET : In emergency doctors are suppose to treat by giving antibiotics but if doctor gives overdose of medicine, should he not to be blamed. Should know that life support system is only for emergencies and once the patient stabilize (Happened  early last year) should be removed from ventilator or will do more harm than good.

Going future likes of Mr Orr will do more harm in trying to clean the mess created by them. 

Wait and Watch

Economics sleight of hand and the ever-increasing tortuous manipulations of the  financial system by itself simply cannot solve all the financial problems we are facing.  Those who have only studied economics and finance without studying history might have trouble understanding this, so here is food for thought:

Regarding inflation we could be looking at the Weimar Republic in Germany during the 1920s and 1930s.  Hitler's solution was war,WW2.

The USA's huge unemployment during the Great Depression from 1929.  Roosevelt's solution was war, WW2.  The war turned USA into the most powerful country in the world.

During WW2 Russia was lifted out of a rural peasant economy to a more advanced industrial economy. 

War seems to be the only proven solution for lifting countries out of any overwhelming financial disaster.

War is a permanent condition of mankind.  Even chimpanzees, our first cousins, go to war.

So, what wars are on the horizon? Currently, there are two obvious possibilities:

Firstly, there is China attacking Taiwan which could lead to USA actively defending Taiwan.  If USA turned to other western countries for help it is hard to see NZ declining.

Secondly, there is the possibility of Russia invading Ukraine;  this could easily escalate if the USA intervenes to actively assist Western Europe in defending Ukraine. Western allies from all corners of the world would be asked to help defend democracy.

I would suggest we immediately institute compulsory military training for all those under say 40 years old. This age ceiling could be easily raised to 65 years old if things didn't go well in defending Taiwan and China decided to invade NZ to ensure security of food supply.  The Chinese population of NZ would be interned in concentration camps much like those Japanese living in USA in WW2 were.  This would have the beneficial effect of freeing up many residential properties.  However, the demand for young men (and perhaps young women) for the military would reduce demand for these properties.  Of course, many of those conscripted would not be returning.  The net result being that there would be no demand for houses and their values would drop in the order of say 90%.

The great kiwi Peter Arnett ...was told during the Vietnam war....we had to destroy the village in order to save it....Jacinda & her team have now managed to do the same......well done...not

Remove global mobility restrictions, reopen all businesses, remove all barriers for supply chain......  that will fix your global inflation problem. 



Inflation is overly inflated by the actions of governments reacting to COVID.  Remove everything they had put in place and inflation figures will instantly drop.



Increasing interest rates is only a tiny portion of that problem.  Unless you dramatically increase it by 10-15%, you will never get this 'fake' inflation figure down.

Being a net importer, we shouldn't be expecting too much of a wage rise in lieu of inflation- the problem is in the expectations and not in the events themselves.

Being the largest consumer in the world and having the de facto currency, inflation can be transitory if the Feds wants to make it transitory- that's what people don't get it when the Feds say it is transitory.

If you follow the Fx markets for a while, you will notice that decisions made by RBNZ can only go so far in moving the market but only in the context of what the Americans do.

Proof in point, RBNZ raised interest rates and most punters expect further rises, did it do anything spectacular to the NZD?

No, the inverse actually happened. What other proofs do we need that interest rates is an ineffective tool in dealing with inflation for NZ's case?

The Feds had already done some heavy lifting to moderate inflation last few weeks by shaping the market expectations and all NZ can do like everyone else is to let it fade.

Trying to raise interest rates at a time of a malaise economy is asking for a deep recession and the unemployment rates is misleading because of governmental and legislative support leading to workers behavioural changes. Hence, relying on employment rates as one of the variables in the health of the economy is grossly misleading and had an effect of inflating other variables resulting in a wrong conclusion.

RBNZ will be wise to hold back while the Beehive winds down fiscal support to get a more accurate picture of the economy before deciding the next action.

Karma is a bitch.......Mr Err.

First you Scr$#@ and now you get Scr$#@. End Result = Average citizen is Sc$@% in both scenario.

It's not going away until the bubbles pop. The excess demand comes from excess 'wealth' (the bezzle) created in this decade-long global mega-bubble, absent any equivalent increase in actual productive capacity. Whether that's shares in unprofitable tech companies, crypto, or (in our case) housing excess - all that paper money is grasping for its share of the real economy. Inevitably, that real economy (labour and commodities and finished goods) starts to cost more as the holders of those financial assets seek to convert them into real-world goods.

So this will continue until the bubbles pop, reducing the 'wealth effect' and thus demand. Alternatively central banks and governments continue unnatural efforts to keep the bubbles afloat and let inflation run out of hand until there is serious, violent social dislocation because ordinary people can't eat or travel.

Those are the two options.

In the NZ context, I'm betting that the RBNZ will continue tightening -- will actually go beyond what is currently projected -- as their efforts fail to have the expected effect and the NZ dollar (and more importantly, actual prices of vital inputs like petrol) continues to weaken. We're going to look back enviously at $3 petrol. And we'll laugh at the idea that lifting the OCR by 25bp was considered a dangerously hawkish move.

There are only 3 outcomes

1) OCR rises above inflation and property shoulders most of the fall out as the RBNZ follows its remit on inflation above its other mandates. Economically the most sound outcome but plenty of pain.

2) OCR stays much lower that inflation and inflation is allowed to stay high, RBNZ citing stability and Omicron as reasons for "measured approach". This is effectively a sit back and do nothing.

3) OCR approaches inflation but not high enough to actually reign it in aggressively. Housing still takes a large hit and inflation stays higher than targets keeping the "economic thief in our pockets". Fallout is across the board but the Government can claim they "did everything they could" - it's a tricky situation.

Too close to call but my guess is 3 most likely, closely followed by 2 and 1 a long way back.

Ha of course it's embedded.

I don't recall ever seeing deflation in CPI. Anyone else?

What we have now is the result of 2 decades of central banks encouraging the aggregate demand narrative for cheap credit. For whose benefit?

Yes supply is an issue due to Covid disruptions but the real issue is demand. 

Does anyone know what we're actually demanding anymore, or have we become so programmed/conditioned we just do what we've always done and follow the herd?

Much like I said a few months ago, they should have raised in November by 1%.  Cos right now, inflation is running away and .25% increases will see it fly. Expect the next quarter to be ~7% inflation if they don't emergency raise rates by probably 1.5% now. Even then the OCR would only be 2.25% still pretty low by historical standards.

Time for Adrian Orr to resign, it's been nothing but incompetence from him.

Grant Robertson hasn't done that much better.

My feeling is that the Rate of cpi inflation will ebb and flow, as it has done in past inflationary period s (  Its a stretch of the truth to use the word transitory.) High prices are here to stay.

I think nz is kinda on the edge of heading into a recession.  Omicron , without the level of  govt fiscal support that we had with the lockdowns will be the kick in the arse that sends us over an edge.

Construction has always been a boom/bust sector.

$Nz will continue to weaken. Without the support of high levels of immigration and service sector exports, our chronic current acct deficits have come home to roost. 

Plenty of background inflationary clouds.

Politically , the will is towards deficit fiscal spending and central bank money printing.

A dip into recession.... And that will be their playbook. 

Just my view... At this moment

Omicron is going to show the NZ economy for what it is.... A complete scam. There is no money left. We have been living off a credit card.

Orr and Robbo sacrificed the economy just to make the rich richer. In doing this they have made all of us much poorer. A criminal investigation is required.

6% is not a high inflation rate.

It is funny how so many so called 'experts' said it was transitory, yet many of knew this was not the case, and these rising costs were led by the massive asset inflation, caused by the record low interest rates and money printing. All fueled by greed. 

Has National had its gang HQ repossessed , yep inflation is hitting the 6% mark around the world as the private sector is covering the costs of Covid .

Can the government socialise the costs of inflation while having afforded to keep us all safe for almost 2 years now , while increasing public sector wages , min wage and benefits across the board plus subsidies for Covid affected private sector .

Fortunate to be in NZ and not one of the other basket case countries USA , Brazil ,UK .

The exodus begins