Disturbing detail in latest inflation data that questions OCR Cut wisdom
If we look at the latest inflation data, the main deflationary pressure was caused by falling petrol prices…
Lower petrol prices, down 9.2%, helped offset rising prices. This included the removal of the Auckland regional fuel tax of 10 cents per litre plus GST on June 30, 2024.
“Petrol makes up about 4% of the CPI basket. Its price fall made a significant contribution to the slower increase in the annual inflation rate in December 2024,” Growden said.
…the problem is that cycle is at an end because oil prices are going up thanks to sanctions against Russia’s Shadow Fleet and the threat of trump’s tariffs pushing the American dollar higher and higher…
“However, the downturn in imported inflation looks like it is now coming to an end, especially with oil prices pushing higher and the NZD dropping in recent weeks.”
…Core inflation in America rose .2 beating predictions of .3 while job data was stronger than expected.
Since Covid ruptured supply chains and geopolitical tensions changed just-in-time supply chains to just-in-case supply chains, the West has been importing inflation.
This has caused price gouging by Price Makers and crushed the working classes with a cost of living crisis…
Half of recent US inflation due to high corporate profits, report finds
Thinktank report says ‘resounding evidence’ shows companies continue to keep prices high even as their inflationary costs drop
…If he implements eye watering Tariffs,(which he has already put off to Feb 1st now) they could cause enormous and immediate economic dislocation.
This seems fine according to JD Vance…
In the end, Trump may not care too much if the dollar becomes a source of global instability. Vice President-elect JD Vance argued last year that the dollar’s role as a global reserve currency has subsidized Americans’ ‘mass consumption of mostly useless imports.’
…the last time the American Dollar became this dangerously over priced was in 1985 when a negotiated series of interventions was agreed to bring the dollar down in a controlled manner…
This problem last occurred in early 1985, when the dollar was universally reckoned to be dangerously dear. At that time the US was able to call on trading partners who depended on the US security umbrella – the UK, Germany, France and Japan – to negotiate the ‘Plaza Accord’, which coordinated a series of interventions in the foreign exchange market that allowed the dollar to decline in a measured way.
…there is no way China would agree today to helping America devalue their dollar generated by Trump’s Tariffs.
That leaves a dangerously overvalued currency risking massive financial dislocation all because Trump thinks God loves him.
Petrol was the downward inflationary pressure, if Trump implements tariffs the American dollar spike will see petrol prices erupt and that questions the wisdom of an OCR Cut when inflation could substantially tick back up.
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A blind person could see that interest rate cuts only fuel inflation and the sooner house prices are added to the CPI the better .Then we would see the true inflation that has destroyed NZ over the last 50 years or more .Take housing out of the equation and we will see that the NZ growth over that 50 years is abysmal .Willis wants to flood the country with tourists again ,without investing in infrastructure to support them .This is another false industry .Over the years NZ has failed to commercialize any major inventions like the disposable syringe which, if we had kept it protected by world wide patents ,should have been NZs Nokia .This is where we need to be proactive we see too many things developed here then sold off shore for a few quick bucks and someone else sells the product back to us .The energy drink V is another example .Maybe willis could stump up the required capital needed to keep those things here in Aotearoa instead of just importing cheap labour and flooding the country with tourists which just ruin the roads and bugger off again .
It’s another good reason to electrify our economy ASAP.
Unfortunately the TalkZB fan base still demand their fossil Ford Rangers.
I don’t believe we are at the point in an economic cycle where rising oil prices will accelerate an increase in inflation. When oil prices increase (via commodity prices or the indirect effect of a strengthening US Dollar) then it is more likely to create a deeper recession. Rising oil prices have historically had a greater impact on economic growth than inflation.
As our economy has hit the rocks and it now breaking up on a rocky shoreline (like a NZDF surveying ship) a further rise in oil prices will make it sink faster.
Extremely poor management of the economy by the National led Coalition. Extremely poor management from which all New Zealanders will benefit.
I brought an ev for the first time last April,everyone thought I was stupid because the rebate was cancelled,and rucs were brought in…
you are a winner as your cost on a per litre cost is only 40 cents per litre including RUCS if you charge at home it is even cheaper
Reasonably accurate analysis. There is still a lot of inflationary policy (budget deficits = new money entering the financial system = inflation) both here and abroad that has yet to work it’s way through the economy. I expect interest rates will stall in 2025 (and might potentially even trend higher if inflation gets out of control).
Inflation may be steady at 2.2%, but don’t be fooled—workers are still getting squeezed.
Basics like rent, insurance, and energy keep skyrocketing. Meanwhile, the Government’s 1.5% minimum wage increase won’t even keep up.
It’s time to stop rewarding landlords and start protecting workers. Lift wages in real terms.
Have you ever had a car with a flat tyre in the Lyttelton. I have and within 10mins there was a tow truck there to take me out. The Railway has a separate tunnel
As a child as a passenger in a Lloyd 600 (cc) – not quite as good as a Fiat Bambina, I’ve had a broken fan belt. Whereupon the driver (my mother) took off her thick denier stockings and fashioned another one. We made it through and the fan belt stockings lasted for another week or so.