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New Zealand’s annual inflation rate has increased by 4.9%, the biggest increase in more than a decade.
Inflation is the economic term that refers to an environment of rising prices of goods and services within an economy.
Yesterday, Stats NZ released its consumer price index for the three months to September 2021, which rose 2.2%.
It was the biggest quarterly movement since a 2.3% rise in the three months to December 2010.
The September spike was up from a 1.3% increase in the June quarter.
Economists had been expecting the CPI to be between 1.5% and 1.8% for the September quarter for an annual figure of about 4.4 %.
The University of Otago’s department of public health senior research fellow Dr Kimberley O’Sullivan believed price rises on everyday items would likely push households to make harder decisions when paying bills, especially because of continued pressure from Covid-19.
Dr O’Sullivan’s research specialised in energy poverty and hardship and the effects on affordability.
Yesterday’s figures made it ‘‘incredibly tough’’ living week-to-week, she said.
The Government’s benefit increases earlier this year, of $20 a week, would not be enough to offset price increases.
‘‘It is very difficult for households at the moment, especially with the extended lockdowns.
‘‘It is at this point they start swapping out things like heating for food,’’ Dr O’Sullivan said.
During last year’s Covid-19 lockdown, the Government doubled its winter energy payment which was a way that ‘‘very easily got extra money into the pockets of people who needed it’’.
The Government now needed to think about a similar time-bound Covid-19 payment, Dr O’Sullivan said.
During the lockdowns people had relied on their ‘‘rainy day’’ funds to get them through.
‘‘Now the rain has turned into a bit of a flood and people are wondering when they will see the end,’’ she said.
Aurora Energy had put prices up recently and, while it was essential to have the grid maintained, there needed to be more thought given to what the knock-on effect of price increases were on consumers, Dr O’Sullivan said.
Several members of the public spoken to on Dunedin’s George St at lunchtime yesterday said increases in the price of fuel were their biggest concern.
ASB senior economist Jane Turner said the recovering global economic demand had pushed commodity prices higher, while at the same time a supply shock from supply chain disruptions has contributed to cost-push inflation.
There was not much the Reserve Bank of New Zealand could do about globally sourced inflation pressure but monitor and react to the impact on New Zealand wage and price-setting behaviours.
Already, inflation pressures have led to a rise in the RBNZ’s 2-year-ahead inflation expectations measure above the 2% inflation target midpoint, to 2.3%.
That increase was likely a contributing factor to the bank’s determination to unwind policy stimulus despite current Covid-19 uncertainties, Mrs Turner said.
— Additional reporting The New Zealand Herald