New data reveals true depth of New Zealand’s cost of living crisis as household spending jumps
New data has revealed the true depths of the cost of living crisis with New Zealanders on average spending 8.2 percent more in the past year.
This follows the CPI stalling at 7.2% (when most thought it would drop) and the scorching 11.3% food inflation on top of a flicker in Unemployment going up .1 when it was widely predicted to drop.
The Fed went with a 25 point rise yesterday with a dovish promise not to over tighten, but the core inflation still jumps and the Biden trick of tapping the strategic Oil reserves which quelled petrol inflation in the last quarter can’t be repeated.
This is all happening as flooding in Auckland shows us in real time how climate change is reshaping the ability for capitalism to function.
Orr must make the most important OCR rise of his career.
If he comes in with 25 points the market will go into an immediate bubble, and he will lose any credibility with the market.
If he comes in 50 points the market will go into an immediate bubble, and he will lose any credibility with the market.
If he comes in with 75 points the market will continue to drag out the inflationary pain and leave him with a day of reckoning closer to the election.
If he comes in with 100 points, the market finally cowers to Orr and he forces inflation down.
Shit is about to get real.
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The main thing is to keep suppressing wages and raising accommodation costs for the filthy underclass through mass migration. It’s what Jeebus would do.
So scared are they of the inflation numbers, that they retained the tax cut on fuel. Add that back in (which they have to do sometime) and inflation pops into double digits.
My guess – they will suck up the revenue loss until after the election.
The people most in need will suffer that’s the tragedy.
Real rates are still negative, and therefore still stimulative. To normalise would mean hiking past 10% — even if you raise rates by 100 bps. each time, your target is still 18 months away!
A huge proportion of the private debt needs to be liquidated to reach the bottom of the cycle — bad debts which should have been wiped in 2008. In Jay Powell’s case, he somehow has to get rid of 60% of the Federal debt as well — which would still be nowhere near the historic lows.
The problem is that the politicians and their corporate donors will not allow the insolvent companies to go bust, and they are incapable of creating a plan to write off the bad debts.
So we’re still in the situation where the only remaining option is to inflate away the debt. The Fed will pivot, cut rates, and force everyone to suffer through high inflation to bail out the insolvent companies.
” The people most in need will suffer that’s the tragedy. ”
Yes the unbridled power of the market has its next victims in its sight.
” President of the Auckland Property Investors Association Kristin Sutherland said the rent hikes were not landlords using the last week’s severe flooding events to make more profit, but simply market forces at work. ”
” Families across Auckland are already struggling with a cost-of-living crisis as inflation continues to bump up the price of everyday items, like food and fuel ”
And more from one of the markets spokespeople.
” “I’m not in a position to say whether it’s fair or not. It’s the same in any market when the supply and demand changes. I don’t think landlords are out there to make an extra buck.”
“At the end of the day, they’re in there just trying to do the best by their tenants really, and offer properties to people. And if if the rental price has changed during that time, then that is the market.”
https://www.rnz.co.nz/news/national/483472/auckland-rents-to-go-up-after-flooding-property-investors-body-says
Orr plans to put 70,000 people out of work. He should be made to invite everyone of those 70,000 to his Wellington office and personally deliver the bad news. See if his explainations wash with those affected.
It’s 1990 all over again!!!!
With inflation at 8.2% and real unemployment at 11.2%. How fucked are Labour now? Will anybody notice now with all of the distractions with the weather bombs been thrown at the country and the high inflation rate of 8.2% making it harder for people to survive under a Labour government?
Will the next government be any better? Who knows. Maybe a Hung parliament for a few months or years even could be a good thing?
Maybe Labour and the Nats cut a deal to form a Grand Coalition to keep Act and NZF in check!!
Who knows, but, all we really know is this LINO caretaker government isnt the solution.
The main drivers of inflation in this case are imported. They are not driven by local demand. These include energy costs driven by the Ukraine war and sanctions on several oil producing countries. Food costs due to Ukraine and use of covid stimulus to speculate on commodity prices already impacted by lack of capacity in the global supply chain relating to covid. And that lack of capacity. These are mostly basic items or the transport of them. We need to eat and run our cars so demand is largely fixed. After supporting everyone through covid we now seem quite happy to destroy those same individuals and businesses to control something we have no control over. As in the 70’s fuel shock, wage rises are mostly a reaction to higher prices. The solution then was double digit interest rates which put economies into stagflation/recession for a decade and started the decline in real spending power in the west. Now when we were finally seeing the wage and salary rises we agreed were needed in NZ before inflation appeared we are once again going to step on the brake. I was hopeful the govt would finally realise the way the economy is structured doesnt benefit a large sector of the population, but I suspect it is that sector that will be sacrificed to preserve the capital of lenders. Using interest rates to supress supply driven inflation means that a much larger part of the demand economy needs to be destroyed as you are trying to drive demand below those fixed baselines we referred to earlier. Its a bit like treating a bacterial infection with mercury. It may work, but it wont do the patient any good long term.
Sure managing inflation by driving down the loving standards of the workforce and more so those re-allocated via unemployment, is a service to the god of mammon, capital. It’s a humanity hating tyranny.
People decide in the first year of economics – if they will serve mammon, or not. People decide in their first year of politics – if they believe in the equal value of citizens or not. And in sociology, if there life will be about feathering their own nest, or not. There is something essentially psychopathic about the middle class regime who bow down to mammon because they are deemed not the class to be oppressed the most by it.
And in religion one can note the concept of dividing the world between those to receive the blessing and those to receive the curse – as if implying a sanctioned order of God origin to injustice on earth. Some for the rise Mr Air above the Jordan New Zealand rapture levels of 1% property mammon capital wealth accumulation and yet greedy for yet more. Seeking it by tax cuts guarantees it comes from the sick and homeless. More blessings for the haves more curses for the have nots. White men and their God and mammon imperialism. Down with the patriarchy.
This is controversial, but I believe NZ needs to urgently build up its fuel reserves in order to transition. We can’t be left trying to undertake a major transition without enough fuel for it to be successful for the entire population.
I fear transitioning turning into an even greater abandonment of, and increase in the numbers of people in poverty. Transition cannot become survival of privileged lifestyles of wealthiest and greater devastation for the poorest with those between trying to stave off falling into poverty and political abandonment themselves.
These are dangerous times and I feel fearful of a climate and fuel transition becoming first Dickensian and then worse.
Ironically insufficient fuel to enable the entire population to change to a sustainable way of living could trigger a truly nasty battle in which the survival of the poorest is seen as a direct threat to the middle class.
Ironically, transitioning requires fuel.
The idea that the way to beat inflation is high interest rates is neo-liberal 101.
Using the HLPI (includes the rising mortgage interest cost) it is 8.2%
How does one lower it, by increasing the cost of debt?
Increasing the cost of debt in the end increases the cost of government debt and results in longer term pressure on government capability.
A rent freeze is far smarter and unlike the petrol tax matter has little impact on government revenues.
I am assuming you were not around to live through Muldoon’s rent , price and wage freeze .It was a disaster for all concerned .
Why just freeze rents why not tradesmen .car hire firms ,equipment hire , and a whole heap of other business people.
I lived in Chch and my advice to any one get work done is check who you hire the Cowboys and rip of artists will be out in force
Preventing people who own rental properties from exploiting earthquake or flood diminished housing supply to extort “windfall” profits has nothing to do with a wage price freeze.
And the wage price freeze of 1982-1984 was no worse than the period before or after it. There was a period of either high inflation or high interest rates (mostly both) from about 1975 to the mid 1990’s (“cured” by the ECA/real wage decline and higher levels of unemployment). The people who chose that option also chose to end gift duties and estate taxes and slash benefits – immoral bastards.
It’s well known amongst economists that you can slow the rise in the price of socks by putting people out of work and making it more expensive to buy housing, SPC.
You know it makes sense.
Nothing is well known by economists.
Interest rate inversion. Its happening. The Fed is backing off. The floods.
This could be the most unaccurate prediction ever made by TDB.
the question is why do minimum wage workers get blamed for inflation when it’s clearly fueled by middle class profligacy and record profits by our gouging businesses, how about we try taxing them and actually paying workers….there’s a novel policy