Why 4.7% CPI inflation is bad and how Red Sea conflict will make it worse
CPI inflation falls in line with expectations to 4.7 per cent in December quarter
Annual inflation fell in line with economists’ expectations to 4.7 per cent in the final three months of 2023.
This was a decent improvement from the September quarter, when it sat at 5.6 per cent.
Inflation eased more than the Reserve Bank (RBNZ) anticipated in November, when it forecast the figure falling to 5 per cent in the December quarter.
Nonetheless, at 4.7 per cent, the rate remained out of the RBNZ’s 1 to 3 per cent target range.
The vast majority of Kiwis under pressure from the cost of living crisis will find cold comfort in the claim CPI ‘only’ went up 4.7%.
The 600 000 needing food banks monthly won’t notice the distinction.
Those first time home buyers bleeding mortgage repayments won’t feel a ‘drop’.
Any such market euphoria has to be tempered with what we are escalating in the Red Sea with shipping costs jumping 300% since November.
As a trading nation, these costs will spike into NZ and we will see that impact in the next quarter.
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Six soldiers is probably half of our ready force. The rest have left because they disagreed with being used as security guards for Adern’s illegal detainment of NZ citizens returning home during covid.
Also it’s a naval issue but our navy is currently unable to deploy a single vessel on any long term mission.
To use the government’s favourite buzz word du jour, one should not conflate inflation with CPI.
Inflation is the general increase in prices, and CPI is the increase of a small basket of goods which has been manipulated over the last 4 decades to represent a number half or less of true inflation.
An artificially low CPI keeps interest rates artificially low, increases in money supply and property values artificially high, and real wage growth negative.