8.6% US Inflation, new Beijing lockdown and the case for 10% inflation in NZ
US inflation hit a staggering 40 year high by coming in far hotter than analysis’s had predicted.
There was a clear belief in the market that inflation for the quarter would be .7, it was 1 bringing the annual rate to 8.6%.
There was an immediate market sell off with the Dow dropping 880 points with the Nasdaq and S+P Alsop getting crushed.
There is now talk that the Fed will bring back the .75 rise option and even commentary that the Fed must raise the interest rate by a full point if the Fed want to get ahead of the Market.
This is all putting pressure on Orr to raise the OCR far more aggressively than he has told the market.
That is going to cripple mortgagee holders and send food prices soaring because it’s supply side dynamics that are causing the inflation, not higher demand.
Look at China and their zero tolerance policy towards Covid. Within the week of lifting some restrictions that have plagued over 50 megacities, representing almost 40% of China’s GDP, Beijing has had to go back into lockdown because of course, predictably, Covid has re-entered China.
This lockdown, re-open, back into lockdown dynamic is going to continue to damage global supply chains on top of the real possibility that the war in Ukraine is simply not going to end this year and Russian oil and basic metals and food sources will explode in price.
Add on top of this extreme drought and rain conditions that are damaging the agricultural calendar and we have the perfect storm of war, plague and famine.
The economic stress that is causing such malaise in NZ right now hasn’t even fucking started!
Things are about to get far grimmer.
Freaked out by Russian military aggression and Chinese threats? Wait till Israel bombs Iran.
Increasingly having independent opinion in a mainstream media environment which mostly echo one another has become more important than ever, so if you value having an independent voice – please donate here.
If you can’t contribute but want to help, please always feel free to share our blogs on social media
Apart from rampant house price inflation and failing to do anything meaningful with the supermarket duopoly I cannot blame Labour for the rest of inflation. Although both are major components to our problem, National banging on about inflation is just pure bullshit theatre because it’s a world wide phenomenon as most of us use the same shitty neoliberal economic model.
Fuel taxes must remain off, even lowered more as Dubai crude that we buy from relentlessly marches upwards., And the half price fares are helping a tiny bit but hardly anyone uses public transport in reality. The government should definitely pull the pin on the Auckland fuel tax that Auckland Transport waste anyway. That would cheer 1.5ish million of us up greatly!
Ironic that the RB is going to have to tank house prices to get things under control though although they whisper they won’t. Something our own government were too afraid to go near.
We don’t buy Dubai crude. The Ardern regime stood by as the refinery New Zealand taxpayers paid for was shut down and is currently being destroyed.
If not for that, we could be buying cheap crude from civilized countries like Iran and Venezuela. But that would hurt the fee-fees of Ardern’s bosses, so it won’t happen.
The crude oil futures market we trade in is Dubai. Not their oil. They have stuff all oil in terms of the middle east.
Again with the taxpayer funded refinery. It was sold by the government in the 80’s. Are you suggesting Arden should have purchased it back again?
Wouldn’t have been a terrible idea to buy it back tbh.
Ok but John White keeps missing the point that the ‘taxpayer’ sold the refinery in the 80’s. Like Ardern stood by while a state asset was scrapped. She didn’t because it wasn’t
“Beijing has had to go back into lockdown because of course, predictably, Covid has re-entered China.”
I think you meant to say, because a virus that corrupt Western shithole countries like New Zealand have chosen to incubate rather than eradicate has re-entered China.
You sound like someone from China. A fan of the CCP perhaps?
https://www.telegraph.co.uk/global-health/science-and-disease/china-still-withholding-data-covid-origins-says/
No, I’m just mentally well and aware of the science. Let me guess, you championed Jacinda’s foresight before she chose to allow COVID in and are now ignoring things?
Oh fuck, Jacinda caused the demise of the dinosaur too?
With the NZD/USD currency pair trading around $0.63 and treading down, 10% (year-on-year) inflation is a reasonable assumption.
New Zealand has got a very high price to pay for Adrian Orr’s enrichment of his mates.
Yes, I agree. Already seen a lot of evidence of soaring food prices just this afternoon. The pressure being put on Adrian Orr is so ridiculously high that I would suggest interim assistants be employed to help. We can’t have this guy overwhelmed by pressure or too influenced by any one or two factors, nor do we want him to take the blame for this now, or later, as they would be unfair.
Mortgage holders will have to pay more too. This is not an overly negative fact for most New Zealanders, in my opinion, however in terms of other countries, in particular the USA, I do shudder when I think of the potential medium to long term economic carnage.
Welcome to ‘energy poverty’ caused by radical green policies.
The fever dream of the Greens is to return the world to a more sustainable, holistic past that never existed. Instead we will be pitched into a grinding medieval poverty where we’re all losers, including the environment.