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Price rises - the last official annual rate is 4.9% - are worrying.
Concerning, too, is worldwide inflation. The United States figure is 6.2%, and the International Monetary Fund puts global consumer price increases at 4.3%, the highest level since 2011.
Apart from when GST changed, New Zealand’s figure is well ahead of anything experienced since 1987.
The global economy, technological advances and cheaper goods from Asia have suppressed inflation. The Reserve Bank has been more concerned to push inflation up to the 1% to 3% range than cut it back.
Deflation is a curse. A downward spiral compounds as consumers hold off buying because prices will fall. Fewer purchases and less economic activity then suppress the economy further.
Inflation, once it takes hold, does the opposite. Price rise expectations feed on themselves. Buy now because next week the sofa will be cheaper. The economy becomes overheated, and wages and prices begin to spiral.
Meanwhile, those on fixed incomes become poorer and savings are undermined as returns fail to match rising costs.
That is the way with bank deposits at present. Interest rates for 12 months have risen just to about 2%, much less than that 4.9%.
This difference encourages, and can even force, savers into risky investments in the hope not to slide backwards.
The world seemed to be able “to print” trillions of dollars through quantitative easing without collateral inflation damage. But that, and low-interest rates, pushed up asset prices like houses and shares.
It made the rich richer. Inflation has returned.
Energy and commodity prices have climbed, and shipping costs have taken off.
New Zealand, too, through Reserve Bank bond-buying, has also been “printing” billions of dollars.
This country was buttressed from Covid collapse after last year’s lockdown by the wage and business support scheme and other additional government spending.
However, add acute labour shortages and imported inflation and the outlook is uncertain.
The Prime Minister’s generation is too young to have experienced the damage from the 1970s and 1980s inflation. Although homes were much cheaper than today, mortgage rates climbed above 20%. All sorts of distortions follow the stresses of high inflation.
Stagflation (stagnation and inflation at the same time) took hold.
This was accentuated by the oil price shocks of the 1970s and by protectionist policies and subsidies.
Independent reserve banks played a key role in taming inflation. The traditional method is to raise the official cash rate, and therefore interest rates, to dampen demand. There are doubts, however, on how this will curtail inflation in New Zealand when much of it comes from overseas.
The bank here twice raised the official cash rate by 0.25%. It is now 0.75%. The bank is trying to cool the overheated economy while trying not to crash it.
The unknowns around the Omicron Covid variant make balancing along this tightrope even more challenging.
There are also doubts about the independence of reserve banks, including in this country. The remit of price stability and the 1% to 3% target has been muddied. The bank governor must consider maximum sustainable employment and, more recently, have regard for house prices.
Cheaper goods from around the world previously compensated for domestic inflation. Local government rates, for example, have risen consistently above the overall cost of living.
Electricity prices have increased more than they should. Minimum wage rises have been hefty and productivity growth too small.
Price escalations might be ameliorated a little if the supermarket duopoly had less power and if the likes of building materials were not so expensive.
Economists, commentators and policymakers debate whether the jump in inflation is short-term or is becoming embedded.
Might matters return more to equilibrium once the worst of Covid is over and can inflation pressures be eased slowly? Or will inflation only be curbed by a damaging slowdown?