Opposition finance spokesperson on inflation

It’s interesting to see that the ODT in 0.4% inflation in line with Reserve Bank forecasts  quotes criticism from an opposition finance spokesperson – Green MP Julie Anne Genter.

Green finance spokeswoman Julie Anne Genter said low oil prices meant the consumer price index was hiding the cost of housing, especially rental housing in Auckland, which was rising much faster than wages and other prices.

Ms Genter said low inflation made it more likely the Reserve Bank would cut the official cash rate again soon, which could just pour more fuel on the housing crisis fire.

‘‘If your rent is going up 5% but you’re one of the almost 50% of New Zealanders who did not get a pay rise last year, overall low inflation isn’t going to help you.”

National’s failure to fix the housing crisis meant New Zealanders were stuck between a rock and a hard place. Lower interest rates could help boost the productive economy but could also cause even more housing cost problems, she said.

High housing costs in Auckland and in an increasing number of regions is a major ongoing issue that doesn’t seem to have any significant solutions. Freeing up of land for subdivision is still slow and land prices keep rising rampantly.

That was likely sourced from a Genter press release: Low inflation hides cost of housing crisis

Low inflation in the Consumer Price Index (CPI) hides the way the housing crisis is hitting peoples’ pockets and distorting our economy, the Green Party said today.

The CPI showed that inflation was 0.2 percent in the March 2016 quarter and 0.4 percent for the year to March 2016, but housing costs rose 3 percent in the year. MBIE data shows rents across the Auckland region rose on average 5.2 percent in the last 12 months.

“Low oil prices mean the CPI is hiding the fact the cost of housing, especially rental housing in Auckland, is rising much faster than wages and other prices,” Green Party finance spokesperson Julie Anne Genter said.

“If your rent is going up five percent but you’re one of the almost 50 percent of New Zealanders who didn’t get a pay rise last year, overall low inflation isn’t going to help you.

“Last week new data showed that median Auckland house prices are now almost ten times the median household income, so it’s clear that housing costs are skyrocketing for people looking to buy their first home.

“Low inflation makes it more likely that the Reserve Bank will cut the OCR again soon, which could just pour more fuel on the housing crisis fire.

“National’s failure to fix the housing crisis means we’re now stuck between a rock and a hard place: lower interest rates could help boost our productive economy, but could also cause even more housing cost problems.

“We urgently need stronger action to fix the housing crisis including a Government-led home-building programme, quality mid-rise apartments around major transport routes, and measures to stop speculation like a comprehensive capital gains tax (excluding the family home) and restrictions on overseas buyers,” Ms Genter said.

In contrast there doesn’t appear to be anything from the finance spokesperson from another opposition party – the Latest from Grant Robertson is dated  05 April 2016.

Robertson’s last  Facebook activity was updating his profile picture  nearly a week ago.

Funnily (or tragically) Robertson posted #outoftouch on Twitter yesterday in response to:

He could get a lesson from Genter on how to be on the ball in his spokesperson role. Genter also got coverage from Newstalk ZB:

Low inflation hiding true scale of housing crisis: Greens

I can’t find Robertson featuring in the news this week apart from references regarding the upcoming Labour caucus reshuffle – leader Andrew Little says that he is totally satisfied by Robertson’s performance:

Little said nobody had suggested he change the finance spokesperson, and when he set up his Shadow Cabinet in 2014 he made it clear Robertson would be in the finance role until at least next year’s election. “I’m totally satisfied with Grant’s performance and have no intention of changing him out of the finance role.”

From NZ Herald Labour to ‘rejig’ caucus

Finance Minister on the inflation rate

Inflation remains low at 0.4% (annual to 2016 Q1). Not surprisingly Finance Minister Bill English talks up the benefits of low inflation and the economy in general.

From ODT: 0.4% inflation in line with Reserve Bank forecasts

Mr English said New Zealand was in the unusual situation of having solid economic growth, more jobs and rising wages at the same time as very low interest rates and inflation.

‘‘This is helping New Zealand families get ahead. Households with mortgages have the double benefit of low cost-of-living rises and lower mortgage servicing costs, which will be particularly welcome in regions with increasing house prices.”

Since the start of 2012, the average annual wage had increased by more than 10% to $57,800, considerably faster than inflation which had been only 3.1%, he said.

Part of that wage increase is likely to be catching up from suppressed wages during the Global Financial Crisis.

An additional 175,000 jobs have been created over the past three years, with a further 173,000 expected by 2020.

‘‘Overall, New Zealand is doing well and New Zealanders are reaping the benefit of a growing economy,” Mr English said.

Many New Zealanders will be benefiting,and National will be benefiting with no driving need for a change of Government.

But many are still struggling, like a large number who are still unemployed (133,000 at the end of 2015), many more who can’t get as many work hours as they want, and those being hit by housing costs and rentals in Auckland and in a growing number of regions.

A high inflow of immigrants continue so additional jobs are essential, but housing is still failing to keep up forcing up land prices.

See: Opposition finance spokesperson on inflation

Annual inflation 0.4%

New Zealand continues to have barely any inflation , with low oil prices continuing to keep costs down but food prices are also down 0.4% over the last year.

ODT reports: 0.4% inflation in line with Reserve Bank forecasts

Inflation was 0.4% for the year to March 2016, according to figures released by Statistics New Zealand today. Inflation for the March quarter was 0.2%. Both figures were in line with Reserve Bank forecasts.

Much of quarterly increase was driven by tobacco products, which rose 9.4% after an increase in excise duty in January.

Lower oil prices contributed to the low cost-of-living increase. Petrol prices fell 7.7% in the first three months of 2016, after a 5.7% fall the previous quarter.

Food prices were up 1.2% in the quarter, but were down 0.4% over the whole year.

Inflation in each of the 11 categories used to calculate the CPI:

  • Housing and household utilities- up 3%
  • Food – down 0.4%
  • Transport – down 4.6%
  • Recreation and culture – down 0.2%
  • Alcoholic beverages and tobacco – up 3.5%
  • Clothing and footwear – up 0.5%
  • Household contents and services – up 2.2%
  • Health – up 0.1%
  • Communication – down 4.6%
  • Education – up 2.6%
  • Miscellaneous goods and services – up 1.5%

Key facts: (Statistics New Zealand): Consumers Price Index: March 2016 quarter

Quarterly change

In the March 2016 quarter compared with the December 2015 quarter:

  • The consumers price index (CPI) rose 0.2 percent to a level of 1200.
  • Petrol prices fell 7.7 percent, making the largest downward contribution.
  • Low oil prices contributed to price falls for air fares.
  • Housing-related prices and food prices rose.
  • Prices for tradable goods and services fell 0.9 percent, while prices for non-tradable goods and services rose 1.0 percent.
  • After seasonal adjustment, the CPI rose 0.2 percent.

Annual change

From the March 2015 quarter to the March 2016 quarter:

  • The CPI increased 0.4 percent (up from 0.1 percent in the year to the December 2015 quarter).
  • Rentals for housing (up 2.3 percent), prices for newly-built houses excluding land (up 5.0 percent), and local authority rates (up 6.2 percent) all increased.
  • Lower prices for other private transport services and petrol made the main downward contribution.
  • Prices for non-tradable goods and services increased 1.6 percent.
  • Prices for tradable goods and services decreased 1.2 percent.

Average prices

  • The average price of 1 litre of 91 octane petrol was $1.69 in the March 2016 quarter, compared with $1.84 in the December 2015 quarter.
  • The average price of a pack of 25 cigarettes was $28.79 in the March 2016 quarter. This compares with $26.43 in the December 2015 quarter, and $13.28 in the December 2009 quarter (before annual 10 percent excise tax increases were introduced).

Quarterly inflation since Q3, 2006:

Inflation2006Q6-2016Q1

Source: Statistics NZ – CPI data visualisation

See:

New labour index

The Reserve Bank is introducing a new labour index that puts less importance on the unemployment rate in an increasingly complex labour market.

ODT reports on a speech by Reserve Bank deputy governor Geoff Bascand in Dunedin yesterday.

New labour index more sensitive

The Reserve Bank has introduced a new labour market index in response to the varying and, at times, contradictory information provided by a wide range of labour market indicators.

Reserve Bank deputy governor Geoff Bascand said in a speech in Dunedin yesterday rapid growth of the workforce, boosted by new migrants, women and older workers, had helped create strong economic growth over the past four years, without driving up inflation.

The main drivers of the rapid growth in labour supply had been population and increased participation.

“Over the past four years, New Zealand’s population has grown by a quarter of a million people, with over half that number coming from net migration.”

The economy had expanded steadily since 2011 and created 180,000 extra jobs but the unemployment rate had declined only modestly, Mr Bascand said.

Quite a few more jobs but more immigrants and returning Kiwis looking for work.

Mr Bascand identified large flows from non-participation into employment, flows that were much higher than those witnessed in other countries.

About two-thirds of the newly employed were non-participants in the previous quarter.

That is a significant shift into employment.

The largest recorded surge in migration in 100 years had contributed to housing and consumer demand and job growth but without the inflation pressures accompanying the previous wave.

Because migrants increased overall spending in the economy, and also increased the labour supply, the net effect on inflationary pressures could be ambiguous, he said.

“Higher labour force participation by women and older workers, together with the characteristics of this particular migration cycle, go a long way to explaining why wage and non-tradeable inflation pressures have proven less than expected.”

Much of the current surge of migration was explained by weakness in the Australian and world economies, making New Zealand a relatively more attractive place to live, Mr Bascand said.

“Because our labour supply has increased at a time when businesses are facing lower world demand, it results in lower wage and inflation pressure.”

Employment and unemployment rates.

key-graph-employment

That shows a flattening in employment when New Zealand moved into recession around 2007 and a reduction when the Global Financial Crisis hit soon afterwards.

Since 2013 employment has trended upwards again and unemployment has dropped a little.

I don’t know how the new labour surveying will affect ongoing comparisons.

Wages have recently been rising slightly faster than the lowest inflation rate since 1999.

key-graph-inflation-since-1990