16 April 2002
“It has been clear for some time that today’s CPI announcement would show a lift in annual CPI because the negative quarter of March 2001 drops out of the annual statistic,” said Council of Trade Unions economist Peter Conway today.
“In fact the figure of 0.6% for the March 2002 quarter is slightly lower than the consensus forecast.”
Peter Conway said that although the annual increase of 2.6% does put pressure on wages, when unions bargain there is a whole range of factors - recruitment and retention, state of the enterprise or organisation, industry trends, productivity, what happened in the previous negotiation, movements in conditions of work, as well as inflation levels- that influence wage outcomes.
“In late 2000, consumer prices peaked at 4% and this had a minimal impact on wage bargaining,” he said.
Peter Conway said unions wanted to see real wages increase but knew this needed to be based on sustainable factors such as investment in skills and training.
“There are some short-term inflationary pressures,” he said.
“But because the medium-term outlook is for CPI to fall back to more modest levels, the CTU believes that it is better for economic growth and employment if there are no further rises in interest rates in the meantime.
“Other factors that should also be noted are that the increase in GDP for the March quarter was only 0.2% and the USA is still running a cash rate of 1.75% compared with New Zealand on 5%.”