Inflation has its claws in the New Zealand economy and Kiwis are paying the ever-higher price, National’s Finance spokesperson Nicola Willis says.

“Today’s new data proves that New Zealand prices have continued to surge at a painfully fast pace, increasing by 7.2 per cent in the year to December.

“Alarmingly, this surge is occurring even while inflation eases off around the world, with lower rates of inflation now evident in the US, Japan and Canada and petrol prices falling quicker than many had predicted.

“Inflation now has a tighter grip in New Zealand because of homegrown problems like worker shortages, higher costs for landlords being passed on to tenants, and Labour’s relentless commitment to yet more spending and borrowing. Tellingly, in the final part of last year, New Zealand’s non-tradeable (domestic) inflation rate was higher than the international factor.

“Today’s data is bad news for anyone with a mortgage or credit card bill to pay, because it suggests the Reserve Bank will have to keep hiking interest rates to get runaway prices under control.

“Chris Hipkins’ Labour Government must take responsibility for allowing inflation to get a vice-like grip on the New Zealand economy. When Labour should have been trimming its sails and easing off on costs it instead spent up a storm and put the accelerator on wasteful policies like the TVNZ-RNZ merger.

“Inflation has now been outside New Zealand’s targets for almost two years.

“It makes Labour’s decision to pump hundreds of millions into an ill-targeted cost of living payment last year look particularly misjudged – the band-aid has now come off but the wound of higher prices remains. No household is being spared by the pain of higher prices with costs for basics like food, school stationary and rent soaring higher than ever.

“The Government can’t keep applying band-aids to this festering sore. Instead, substantive solutions are needed. While Labour fails to address the issues, National has a plan.

“National would re-focus the Reserve Bank on price stability, stop adding costs and taxes to businesses, address workforce shortages, bring discipline back to Government borrowing and spending, and help Kiwis adjust to higher prices by letting them keep more of what they earn with a programme of income tax reduction.”

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