Data released today by Statistics New Zealand shines a light on the challenges facing both the Reserve Bank and New Zealanders, says Labour’s Finance Spokesperson Grant Robertson.
“Headline CPI rose to 1.3 per cent for 2016 – with significant changes in the costs of housing being a major driver. Rents, rates, property maintenance, and household fuel costs all rose faster than general inflation, meaning that the housing costs overall rose by nearly three times the headline rate of inflation.
“The cost of a new house rose 6.5 per cent alone last year according to this data. It’s getting harder and harder for New Zealanders to keep a roof over their head whilst National ignores the consequences of the housing crisis.
“The inflation data also showed the effects that the Government’s cuts are having on essential services, with total education inflation running at 2.9 per cent and primary and secondary education inflation running at 3.7 per cent.
“Hospital services inflation is running at a dramatic 4.4 per cent. National’s failure to invest is forcing more and more of the costs of essential public services to be passed on to middle New Zealanders.
“Furthermore, these figures may also cast doubt on the Government’s forecasts for CPI inflation in 2017 – which both Treasury and the RBNZ forecast to be 1.5 per cent. Should inflation be higher than this then average real terms wage changes this year would turn negative – meaning another year where New Zealanders work hard but see no increase in their pay packets.
“This data shows National has no plan for the economy. Rising inflation lifts the value of the Dollar, making it harder for New Zealand to export to the rest of the world.
“Rising inflation also puts pressure on the Reserve Bank to look harder at interest rate changes – meaning higher borrowing costs. Yet National has said and done nothing to manage the pressures that have led us here.
“It’s time for a fresh approach – a Labour-led government would tackle the housing crisis, invest in essential public services, and build a stronger and more resilient economy.”