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Inflation hits 32 year high

Inflation hits 7.3%, its highest peak in 32 years. The rise was driven by increasing rents and construction costs.

Monday, July 18th 2022, 12:27PM 1 Comment

by Eric Frykberg

Prices rose 7.3% in the 12 months to June 30. That compares with a previous figure of 6.9% in the previous quarter.

This was announced when Stats NZ released its Consumers Price Index (CPI) a short time ago.

The main items contributing to the rise were housing and household utilities, due to rising prices for construction and rentals. Prices for the construction of new dwellings increased 18% in the June 2022 quarter compared with the June 2021 quarter.

Other things to go up in price were transport and especially petrol which went up 32%.

The annual CPI figure comprised partly a rise of 1.7% in the June quarter. Not even one-off rises in GST were able to push inflation this high.

The actual rise announced today compares with forecasts of 7.0% and 7.1% by the main bank economists.

One area of interest is the balance between imported inflation, which the New Zealand Government can't control, and the impetus to inflation coming from the domestic economy.

The news today is likely to add to pressure from the Reserve Bank to keep on raising the official cash rate (OCR).

The last big OCR rise was muted because many fixed rates had already been raised in anticipation.

But further rises in the OCR would eventually eat away this buffer, meaning homeowners would face higher mortgage bills.

The latest figure compared with inflation levels in the United States and the UK, at 9.1%, Canada at 7.7% and Australia at 5.1%, though its June quarter figure will not be out until late July and is expected to be higher.

Tags: CPI

« Borrowers should escape the worst despite big OCR jump – bank economistHigh inflation brings new challenges for home buyers »

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Comments from our readers

On 18 July 2022 at 9:47 pm Winka said:
The reason for INFLATION is that it is nothing but a word...!

Rob Muldoon clarified the fact in his address to the nation in 1984 where he stated "I am going to decrease the value of our NZ currency this year at the rate of 1% per month."

What many of us heard was "I am going to create the effect of 12% INFLATION this year."

His method was the same as it is now.

Print 'currency', release it to the banks via sale of self-created government bonds, and subsequently into our pockets, as bank-created overdrafts and mortgages.

All that extra currency waters down the buying power of it, meaning simply that you need more of it to buy the same goods and services...!

Current INFLATION is the result of our government having printed an extra $300 plus billion during the last couple of years...!

For some reason, people often struggle with the word INFLATION, and where it comes from.

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Lender Flt 1yr 2yr 3yr
AIA 6.35 5.25 5.45 5.99
ANZ 6.34 5.59 6.05 6.29
ANZ Blueprint to Build - - - -
ANZ Special - 4.99 5.45 5.69
ASB Bank 6.35 5.25 5.45 5.69
Avanti Finance 6.65 - - -
Basecorp Finance 7.25 - - -
Bluestone 6.89 - - -
BNZ - Classic - 4.95 5.39 5.69
BNZ - Mortgage One 6.39 - - -
BNZ - Rapid Repay 6.39 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Std, FlyBuys 6.39 5.55 5.99 6.29
BNZ - TotalMoney 6.39 - - -
CFML Loans 7.25 - - -
China Construction Bank - 5.35 5.80 5.99
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼4.89 - -
Co-operative Bank - Owner Occ 6.25 ▼4.99 5.39 ▼5.69
Co-operative Bank - Standard 6.25 ▼5.49 5.89 ▼6.19
Credit Union Auckland 5.95 - - -
First Credit Union Special 5.85 5.35 5.85 -
Heartland Bank - Online 4.60 ▼4.79 5.29 5.39
Lender Flt 1yr 2yr 3yr
Heretaunga Building Society 6.50 5.60 6.00 -
HSBC Premier 6.34 5.09 5.34 5.59
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 6.00 ▼4.79 5.15 ▼5.69
Kainga Ora 5.85 5.31 5.58 5.97
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 6.00 5.95 6.45 6.79
Kiwibank - Offset 6.00 - - -
Kiwibank Special - 4.95 5.45 5.89
Liberty 4.84 - - -
Lender Flt 1yr 2yr 3yr
Nelson Building Society ▲6.95 5.55 6.15 -
Pepper Money 5.29 - - -
Resimac 5.59 6.54 6.44 6.98
SBS Bank 6.29 ▼5.39 ▼5.79 5.99
SBS Bank Special - ▼4.89 ▼5.29 5.49
Select Home Loans 6.89 - - -
TSB Bank 7.05 ▼5.65 6.09 6.39
TSB Special 6.25 ▼4.85 5.29 5.59
Unity 5.65 4.95 5.55 -
Wairarapa Building Society 6.49 5.55 6.15 -
Westforce credit union - Special - 5.35 5.85 -
Lender Flt 1yr 2yr 3yr
Westforce credit union - Standard 5.85 6.05 6.55 -
Westpac 6.39 ▼5.55 6.05 ▼6.29
Westpac - Offset 6.39 - - -
Westpac Special - ▼4.95 5.45 ▼5.69
Median 6.34 5.33 5.79 5.93

Last updated: 11 August 2022 8:40am

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