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Today’s inflation figures show the impact of the global oil price shock, while reinforcing the government’s prudent response to global volatility, Finance Minister Nicola Willis says.
Stats NZ’s Consumers Price Index showed inflation was 4.1 per cent in the 12 months to the end of June.
By far the biggest contributor was the increases to petrol and diesel, at 27.5 per cent and 71 per cent respectively.
Stats NZ reports that without changes in petrol and diesel prices, annual inflation would have been 2.9 per cent, within the Reserve Bank’s target range for inflation, Willis says.
“Families have felt the impact of the conflict in the Middle East when filling up their cars.
“Higher global oil prices drove much of this quarter’s inflation increase, rather than a broad surge in prices across the whole economy.
“There are encouraging numbers in this release, with annual food price inflation falling from four per cent to 2.8 per cent.
“Annual rent increases were only 0.5 per cent across the year, the lowest for almost 25 years.”
Willis says the data underscores the need for continued fiscal discipline.
“New Zealand is not immune to global shocks but as a government we must focus on controlling what is within our control.
“For our government, that means making careful choices, restraining government spending, and avoiding decisions that would add significant pressure to inflation.
“Rather than a blanket, costly response that risks fuelling further inflation, we have delivered targeted, temporary, and timely support for the New Zealanders under the most pressure from higher fuel price.
“Taking this approach means we have been able to support people through a short-term shock without undermining the progress we’ve made on New Zealand’s economic recovery.
“Despite the conflict in the Middle East, New Zealand’s economy is set to grow 2.7 per cent on average every year for the next four years, creating 220,000 jobs.
“Wages are expected to grow faster than prices over that period, which is ultimately how we can make life more affordable for New Zealanders long-term.”
The Labour Party says inflation has hit its highest level in more than two years, “confirming what Kiwi families already know – the cost of living keeps getting worse under National”.
“[Prime Minister] Christopher Luxon promised to fix the cost of living, but he has made it worse,” Labour finance and economy spokesperson Barbara Edmonds says.
“Inflation is now at 4.1 per cent, the highest it’s been in two years, and New Zealanders are paying the price.
“Costs were climbing before the Middle East conflict drove fuel prices even higher.
“National’s decisions have left New Zealand more exposed and more vulnerable than it needed to be.
“When fuel prices surged during the war in Ukraine, National demanded accountability from Labour. Now they’re in Government, they’re asking New Zealanders to accept exactly the same pressures they once condemned.
“This isn’t about politics, it’s about whether families can afford the basics. Food prices have risen across every major category over the past year. Milk, bread and mince all cost more, while wages aren’t keeping up.
“National promised relief. Instead, families are getting higher prices, weaker growth, and cuts to the services they rely on.”
Edmonds says Labour has a plan to make life more affordable, with three free doctor’s visits, free prescriptions, a $20 public transport fare cap, and lower power bills through its SolarSaver policy.
The Green Party says exposure to volatile fossil fuels has driven inflation to its highest level in two years, piling more pressure on New Zealanders’ cost of living.
“Stats NZ has today confirmed what every New Zealander already feels at the checkout,” party co-leader Chlöe Swarbrick says.
“Almost everything is more expensive. That is because our economy is wired up to fossil fuels.
“Inflation has hit 4.1 per cent in the year to June, up from 3.1 per cent in the March quarter.
“The biggest driver is the fossil fuel price spike caused by [US President] Donald Trump’s war on Iran, and those higher fuel costs are now flowing into food, freight and power.
“The Greens saw this on the horizon when the fossil fuel crisis first hit, and offered the Prime Minister our Green support to minimise our country’s exposure to imported inflation through rapid decarbonisation.
“All Luxon had to offer as I probed this in question time was, ‘I understand inflation, rest assured’.
“This is the same Prime Minister who boldly declared, ‘Hope is not a plan,’ but clearly, he has worse than no plan.
“His government has worked to increase our vulnerability to fossil fuels and is trying to burn more than a billion dollars on an LNG import facility.
“New Zealanders deserve common sense economic management that keeps bills affordable, protects local jobs and is sustainable in every sense of the word: for people and planet. That’s why the Greens exist.
“We’ll continue to offer our collaboration from Opposition to the government in the hopes that they see the value of working together to support regular, hard-working New Zealanders.”
