New Zealand Labour Party

Inflation piles pressure on National and Reserve Bank

While many households will welcome the low inflation figures announced today, they highlight serious questions for both the National government and the Reserve Bank, Labour’s  Finance Spokesperson Grant Robertson said. 

"While low inflation will be welcomed by many, the data released today paints a troubling picture of the New Zealand economy. The consumer price index only counts new builds in terms of housing costs.  Those rose by 2 per cent annually, and 6.2 per cent for the quarter.  Factoring in rises in rents and the spiralling cost of purchasing existing homes, the cost of housing for most New Zealanders is rising far in excess of inflation.

"This is a huge problem for most New Zealanders who have seen their wages barely rise in recent years. 67 per cent of New Zealanders got a pay rise of less than 2 per cent, and more than 40 per cent got no pay rise at all in the last year.

"These figures will also pile pressure on the Reserve Bank to reduce interest rates. The Reserve Bank has failed to hit its inflation target since 2011, and has kept interest rates high because of National’s inability to deal with the housing crisis

"National have failed on housing and this is having an impact across the economy. Labour has the plan to build affordable houses and crack down on speculators to fix the housing crisis.

“We will also review monetary policy, including the Reserve Banks Policy Target Agreement - to make sure that it is working for all New Zealanders and supporting the overall health of the New Zealand economy - rather than being constrained by having just one target,“ Grant Robertson said.