Political reaction mixed to lowest drop in inflation in over three years

Wednesday, 16 October 2024

The annual rate of inflation dipped one point to 2.2% in September, the lowest rate since March 2021.

Finance Minister Nicola Willis celebrated the numbers, saying “the era of crushing price rises is now over”.

But the Opposition says financial pain will continue to be felt elsewhere.

The Government has celebrated the drop in inflation to its lowest level in over three years, but the Opposition says more pain is on the way for Kiwis.

Kiwibank chief economist Jarrod Kerr said Wednesday’s figures were a sign that “the cost of living crisis is coming to an end, slowly”.

“It may not feel like it, yet, but inflation has eased, and will ease further,” Kerr said.

That mood was endorsed by Finance Minister Nicola Willis, who said the new inflation figures represented more good news for New Zealanders.

“The era of crushing price rises is now over,” Willis said.

“The steps the Government is taking to reduce inflationary pressures by restoring discipline to public spending, reducing the red tape that is stifling innovation and development, and rebuilding business confidence are working.”

National’s coalition partner ACT shared in the optimism, with leader David Seymour saying the drop represented “real hope” for Kiwis.

“This news is the beginning of real hope for Kiwis who’ve persevered through a cost-of-living crisis. We’ve turned the corner on interest rates, and now we’re returning to normalcy on inflation.”

“We need to be ever vigilant of the inflation monster that Labour so recklessly let off the leash, so ACT will continue to push for the cancellation of spending programmes that do not generate real value for New Zealand,” Seymour said.

Views differed on the left, though, with both Labour and the Greens saying more troubles were ahead for Kiwis.

“Inflation is at 2.2%, but the rest of the economy is sluggish,” Labour finance spokesperson Barbara Edmonds said.

“Skilled workers are leaving the country in droves, and with cuts to the apprenticeship boost, the workers to fill the gaps simply won’t exist,” she added.

The Green Party singled out rent rises as being the biggest contributor to the inflation rate and criticised the Government’s treatment of renters.

“Housing is a human right, but this Government is treating it like a game of Monopoly,” Green Party housing spokesperson Tamatha Paul said.

“The current landlord Government has only inflamed the situation by handing landlords $2.9 billion in tax cuts while punching down on renters with no cause evictions and allowing rents to spiral out of control,” she added.

Meanwhile, Council of Trade Unions economist Craig Renney said lower inflation was being coupled with a higher rate of unemployment.

“Lower inflation is good news if it doesn’t come at a cost of much higher unemployment, which every forecast tells us will be happening,” Rennie said.

Rennie said the Government should be investing to ensure unemployment does not rise.

“With inflation now being back in the target band, the Government has no reason to not invest in making sure that unemployment doesn’t happen. Anything else is a choice,” he said.