Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

CPI inflation misleading - does not reflect demand


Media Release July 18th, 2000

CPI inflation misleading - does not reflect excess demand

The latest annual CPI inflation figure of two per cent is totally misleading. It does not mean we need further interest rate rise as the Bank may be targeting entirely the wrong economic yardstick, says the President of the Employers & Manufacturers Association, Barry Brill.

"The abject lack of investor and business confidence should be closely examined," said Mr Brill.

"It represents a very powerful signal that any further interest rate rises later this year may not help beat inflation, but they certainly will depress the economy.

"Business is disenchanted with the outlook for two main reasons: future cost increases coming from Government policy, and uncertain price rises coming from offshore, such as higher fuel and raw material costs. Neither of these can be directly suppressed by the Reserve Bank.

"However both causes of anxiety could result in the tradeables sector being punished by Reserve Bank action. This will happen if there is a robotic translation of higher CPI figures into higher interest rates.

"Ironically, neither Government induced costs nor imported inflation should be the objective of monetary policy. The inflation target should be designed to curb domestically generated price increases brought about by excessive consumer demand.

"Plainly this is not the scenario we have today. The danger is that the Reserve Bank will be targeting external and government generated inflation pressures it can only address by flattening domestic demand in the economy even further. It means the private sector productive sector is forced to take the hit.

"This is not very clever though beyond the scope of the Governor of the Reserve Bank's brief as it presently stands. The challenge it presents has everything to do with the monetary review taking place."

Further comments: Barry Brill tel 09 486 3392 (bus)


© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

ScoopPro: Helping The Education Sector Get More Out Of Scoop

The ScoopPro professional license includes a suite of useful information tools for professional users of Scoop including some specifically for those in the education sector to make your Scoop experience better. More>>

Big Tax Bill Due: Destiny Church Charities Deregistered

The independent Charities Registration Board has decided to remove Destiny International Trust and Te Hahi o Nga Matamua Holdings Limited from the Charities Register on 20 December 2017 because of the charities’ persistent failure to meet their annual return obligations. More>>

57 Million Users' Data: Uber Breach "Utterly Preventatable"

Cybersecurity leader Centrify says the Uber data breach of 57 million customer and driver records - which the ride-hailing company hid for more than a year - was “utterly preventable”. More>>

Scoop 3.0: How You Can Help Scoop’s Evolution

We have big plans for 2018 as we look to expand our public interest journalism coverage, upgrade our publishing infrastructure and offer even more valuable business tools to commercial users of Scoop. More>>

Having A Cow? Dairy Product Prices Slide For Fourth Straight Auction

Dairy product prices fell at the Global Dairy Trade auction, retreating for the fourth straight auction amid signs of increased production... Whole milk powder fell 2.7 percent to US$2,778 a tonne. More>>

ALSO:

Statistics: Butter At Record $5.67/Block; High Vegetable Prices

Rising dairy prices have pushed food prices up 2.7 percent in the year to October 2017, Stats NZ said today. This followed a 3.0 percent increase in the year to September 2017. More>>

ALSO:

Science: New Research Finds Herbicides Cause Antibiotic Resistance

New University of Canterbury research confirms that the active ingredients of the commonly used herbicides, RoundUp, Kamba and 2,4-D (glyphosate, dicamba and 2,4-D, respectively), each alone cause antibiotic resistance at concentrations well below label application rates. More>>

ALSO: