Analysis: The economy has become Nicola Willis' political problem

Thursday, 9 July 2026

ANALYSIS: Nearly a year ago, Nicola Willis stood with Christopher Luxon and told New Zealanders not to listen to the “merchants of misery” in opposition, and said things were going to get better soon.

But out in the wallets of kiwis, the misery lingers a little longer.

Power prices, grocery bills, rates. Up, up, up.

And on Wednesday, the Reserve Bank added the anxiety of rising mortgage rates to the ever growing bill-worry pile.

It’s not all bad. And maybe interest rates won’t go up, like the finance minister has said. Banks had already been primed for some hikes, so we’re already paying the price.

And while in May, the Reserve Bank said inflation was expected to peak at 4.3% in the third quarter, it now says inflation may have already peaked at 3.9% in the second quarter.

Willis was quick to spin the official cash rate hike as a favourable, that the economy was strengthening and the recovery was getting back on track.

But as compared to a year ago, asking households to hold on to the vision that things are getting better after a years-long cost-of-living slog is a hard sell.

Nicola Willis is right to point out that some things are out of her control, especially the actions of the US President. She’s also right to say the economy was looking like it was on the road to recovery before the Middle East conflict made driving the car too expensive.

And this is the problem for incumbents when the going gets tough. Government’s are quick to celebrate and claim credit for the good times, but when things aren’t so rosy, the finger pointing and if’s, but’s and maybe’s come out to play.

This was not the news National will have wanted out of the Reserve Bank.

Economists were split on whether to stare down a potential inflation spike early on so the pain doesn’t run away on them, or whether to see the oil price problem as temporary, isolated and something the New Zealand economy can look through. No need to jump at shadows, one economist said.

Retailers are fearing this’ll put the brakes on spending, that of course has flow on impacts to everything from prices to jobs.

With National having baked itself in under 30% in the polls, they really needed the economy to take off before polling day in November to get out of the doldrums.

Willis wants to reinforce that if only the war in the Middle East hadn’t happened, things might be different.

Unfortunately, people don’t vote on what could have been. They vote on what’s actually happening.

And Willis’ sharp tongue in opposition while highly effective, has left her with some self-planted booby traps to avoid.

In 2022 when inflation was running at about 6% Willis penned this opinion piece for Stuff in which she said it was “not credible for the Finance Minister to distance himself by blaming our inflation woes solely on global causes.”

At that point, Russia had invaded Ukraine, fuel prices were spiking, supply chains disrupted, and we were coming out the back of a pandemic.

“The Finance Minister should stop pretending that inflation is a mysterious visitor from overseas, that he has no control over,” she wrote.

But today when we asked why things hadn’t gotten better when she promised last year it was just “merchants of misery” and “doomsayers” bagging the economy - she pointed overseas.

“Well, there's been a war in the middle since then,” she said.

Under Labour, she said, inflation spiralled out of control reaching a peak of 7.3%

“That has not happened on my watch.”

That is true, but it’s hard to compare like for like. This government has not seen a global pandemic in which the Reserve Bank seemingly forgot to turn the money printer off, either.

What about it not being credible for a Finance Minister to distance themselves from inflation woes?

“I stand by my record and take responsibility for the fact that on our government's watch, we've kept spending disciplined and under control,” she said.

To drive home her point about responsibility laying at a finance minister’s feet in 2022 she noted that the Labour government had been forecast to spend $128 billion. This years budget saw government spending reach $155 billion.

“That reflects the fact that we're also taking in significantly more revenue.

That reflects the fact we have a larger population, we have more aged New Zealanders receiving superannuation, we have growing demands on the public purse, we have simply not increased spending at the rate that the last government did, but have taken careful fiscal decisions,” she said.

As noted previously these are not like for like situations. But if you want to take the credit for the cash rate falling, which National very much has, you have to be prepared to take responsibility when it goes the other way too.

And therein lies the risk of pointing too many fingers as an opposition. You may come to find those same fingers pointing at you when you take the reins.