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


Government cost increases driving inflation

Media statement Friday, July 15th, 2005

Government cost increases driving inflation; holding interest rates high

Home owners would be benefiting already from lower interest rates on their mortgages except for the high price increases being levied by central and local government, the Employers & Manufacturers Association (Northern) says.

"The inflation that is keeping interest rates up is coming almost entirely from areas of the economy not subject to competition," said Alasdair Thompson, EMA's chief executive.

"Its mostly due to high central and local government cost increases - in the June quarter last year government costs were 7.7 per cent higher than the year before, over double the rate of inflation.

"Every quarter since then they have been running over 50 per cent higher than inflation.

"All up the non tradable part of the economy accounted for 4.4 per cent of inflation while the tradable component for only 0.7 per cent.

"It means our exporters and other producers are paying the price for other sectors where competition is non-existent or ineffective.

"Non tradable goods and services include local authority rates, electricity and gas, communications services, insurance, water and refuse, motor vehicle running, education and child care, restaurants, accommodation and house rentals.

"Tradable goods and services are those imported or produced locally but are in competition with foreign goods and services here or in markets offshore."


© Scoop Media

Business Headlines | Sci-Tech Headlines


Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>


Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>


Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>



Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news