Inflation's Wile-E-Coyote moment?

With summer has come a drop in inflation, but it’s still likely to be a big election issue. National’s Nicola Willis says it has ‘dug its claws’ into New Zealand and is becoming embedded domestically. Photo: Lynn Grieveson / The Kākā

TLDR: Quarterly inflation fell to its lowest level in 18 months in the December quarter and is set to fall further through this year as fuel costs and rents stabilise, and as fruit and vege prices fall with better weather. Some economists lowered their forecasts for the peak in the Official Cash Rate later this year as a result.

But will that lower inflation come soon enough for the Labour Government to dampen the ‘cost of living’ concerns now dominating the political debate before the election on October 14? I spoke to National Finance Spokesperson Nicola Willis in the podcast above about whether National’s inflation-fighting tactics would make a difference, or maybe even make inflation worse.

Elsewhere in the news overnight and this morning:

• Leopards freed - Germany agreed overnight to send 14 of its own Leopard II tanks to Ukraine and let others export their Leopards to Ukraine, but only on the condition the United States sent 30 Abrams tanks, which Russia described as an “extremely dangerous decision” which “raises the conflict to a new level of hostilities” WSJ¹;

• 90 seconds left - The Science and Security Board of the Bulletin of the Atomic Scientists moved the hands of its Doomsday Clock forward yesterday by 10 seconds to 90 seconds to midnight, which was the closest it had ever been to a global catastrophe and, largely, it said, “because of the mounting dangers of the war in Ukraine”;

• Net negative - A Stuff/Horizon Research poll published this morning found 13% of voters would be less likely to vote for Labour because of departure of Jacinda Ardern as PM, while 9% said they would be more likely to vote Labour. The finding of a net-negative 4% moving away from Labour came from the poll taken from January 19-21, which was after Ardern resigned, but before Chris Hipkins became the sole nominee to replace her. The poll found 58% said the change of PM would make no difference. Stuff did not focus on the 4% net-negative result.

Paying subscribers can see more detail and my analysis of the inflation results and my interview with Nicola Willis below the paywall fold and in the longer podcast above. All subscribers can hear the full interview above.

Inside the inflation data & National’s inflation-fighting plans