PM says inflation figures show the ‘plan is working’. Others are less optimistic

Wednesday, 22 January 2025

The surprise reshuffle was announced on Sunday afternoon.

The Government is hailing low rates of inflation, while the Opposition goes into attack mode.

The finance minister called the 2.2% annual inflation rate good news for people with mortgages, while the ACT leader said more work was needed.

The Opposition, in response, called the Government “economically illiterate”.

The Government is hailing low rates of inflation as the Opposition goes into attack mode over rising rent costs and higher unemployment rates.

Economists had been expecting inflation to drop to a four year low, but it failed to budge. Still, at 2.2%, it remained within the Reserve Bank’s target band of 1-3%.

Finance Minister Nicola Willis welcomed the news, saying the trend of lower inflation increased the prospect of mortgage rate reductions and a lower cost of living for Kiwi households.

“The steps the Government has taken to reduce inflationary pressures by restoring discipline to public expenditure are working,” she said.

Christopher Luxon and Nicola Willis at the National Party retreat.

“Lower inflation and interest rates set the foundations for economic growth, and the investment, jobs and incomes it creates.”

Prime Minister Christopher Luxon echoed those sentiments. “Inflation remains low at 2.2%,” he said on social media. “Our economic plan is working.”

ACT leader David Seymour says more work is needed on the inflation fight.

National’s coalition partner, ACT, was less optimistic, with leader David Seymour saying more work was needed to deal with inflation.

“At the height of Labour’s lock down and spend-up reign, inflation hit 7.2%. When our Government was elected it was still 5.6%. Getting spending under control is a long hard slog, and we still have work to do,” he said.

Seymour added that ACT remained “ever vigilant of the inflation monster”. The Government needed to forge ahead in its work to cancel spending programmes that are “not making New Zealand richer,” he said.

Greens co-leader Chole Swarbrick labelled the Government “economically illiterate”.

On the other side of the political fence, the Green Party was less than impressed by the unchanged inflation rate, with co-leader Chlöe Swarbrick calling the Government “economically illiterate”.

Swarbrick said the Government’s decisions had helped create rent inflation double the rate of general inflation, and driven more people into poverty.

“Those are consciously made choices, with clear consequences that the Government was warned about,” she said.

Labour finance spokesperson Barbara Edmonds took aim at Nicola Willis.

“Cutting taxes for landlords, paid for by chopping public spending on essential services right through the bone, is not only deeply unfair, but deeply unproductive. It hurts the poorest most, and all of us in the long run.”

That criticism was shared by Labour, with finance spokesperson Barbara Edmonds saying Kiwi families were being squeezed out of work.

“Despite inflation easing globally, National has failed to steer our economy out of trouble, leaving families worse off,” she said.

“New Zealand is now in the deepest recession in 30 years, with unemployment rising, and thousands of Kiwis leaving the country every month.

“Nicola Willis is taking credit for global inflation trends, but domestically high rent, which has increased by 4.2%, and local authority rates, up 12.2% continue to bite.”

The release of the latest inflation figures comes after Luxon reshuffled his Cabinet over the weekend - a reshuffle that aimed to put a greater emphasis on economic growth.

The changes included Willis picking up the new role of minister for economic growth.

The Reserve Bank is due to meet on February 18 to reset the official cash rate.