Latest / The SME Stream / Liam Dann: NZ Herald Business Editor on inflation dropping to 2.2%

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Liam Dann: NZ Herald Business Editor on inflation dropping to 2.2% · The SME Stream

• 0:00
  Speaker 1: As you heard just before our news the war against
• 0:02
  Speaker 1: inflation has been one. Later stats and ZI figures show
• 0:06
  Speaker 1: the inflation rate has dropped a two point two percent,
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  Speaker 1: back within the Reserve banks one to three percent target range.
• 0:13
  Speaker 1: Non tradable inflation remains at four point nine percent due
• 0:17
  Speaker 1: to rising insurance premiums and council rates. And as I
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  Speaker 1: said earlier to Helen, I bet our Cassandra, our profit
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  Speaker 1: of Dome. We'll have some bad news to take out
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  Speaker 1: of this. New Zealand Herald Business editor at largely M
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  Speaker 1: Dan joins us owning I carry you.
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  Speaker 2: Yeah, No, I mean, you know, good news. We'll take
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  Speaker 2: take a win, won't well?
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  Speaker 1: Your headline, I'm going to refuse. Where are we?
• 0:40
  Speaker 2: Yeah?
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  Speaker 1: Should we worry about deflation?
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  Speaker 2: Well, that's true. I'm very quick to go to the
• 0:48
  Speaker 2: next problem that might be coming down the line. That's
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  Speaker 2: economics for National Science.
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  Speaker 1: And it has been pretty grim. Even the bus times
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  Speaker 1: were pretty grim because everyone could see what was about
• 0:58
  Speaker 1: goodn't they if you want to to see what was
• 1:00
  Speaker 1: going to happen. Yeah, it was pretty clear that the
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  Speaker 1: good times were not going to last forever. Yeah.
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  Speaker 2: I think it's been well signaled, at least we could
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  Speaker 2: say that, you know, and look, look, yeah, it is
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  Speaker 2: a win in the war on inflation in the sense
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  Speaker 2: that we are now back inside the Reserve banks target
• 1:16
  Speaker 2: bound for top line. But you know, as people have
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  Speaker 2: become experts and inflation over the last couple of years,
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  Speaker 2: we're all looking at the non tradable and the tradable.
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  Speaker 2: So the tradeable, which is petrol prices and insurance. Yeah,
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  Speaker 2: tradeable is petrol prices and imported food, that kind of thing,
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  Speaker 2: stuff that that's actually come down, come down down, so
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  Speaker 2: it's not even it's actually gone backward. So that's deflation.
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  Speaker 2: But I'm not so worried about deflation of those things
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  Speaker 2: that the rest of the world can worry about that.
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  Speaker 2: But we're cheaper petrol, good news. But the non tradable
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  Speaker 2: is still higher, so that's at four point nine percent,
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  Speaker 2: so people will still be feeling some of that. And yeah,
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  Speaker 2: the big ones rates, insurance costs, and rents were still
• 2:02
  Speaker 2: very high. Particularly some of that is from the big
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  Speaker 2: increases late last year and early earlier this year, which
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  Speaker 2: which have leveled off a bit.
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  Speaker 1: But you know, food is cheaper too, seasonal.
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  Speaker 2: Yeah, seventeen.
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  Speaker 1: Yeah, it makes such a difference to go in and think, Okay,
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  Speaker 1: I'm not going to have to sell a kidney to
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  Speaker 1: get a capsicum.
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  Speaker 2: Hyeh yeah no. So so there's some really some heartening
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  Speaker 2: stuff there, you know, relief. I guess you know, it
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  Speaker 2: had to happen after the kind of ringer we've been
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  Speaker 2: through with interest rates and all the rest of it.
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  Speaker 2: But yeah, that's right. Does it? Does it? Does it?
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  Speaker 2: You know? Have we got control of it? Does it now?
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  Speaker 1: Have we?
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  Speaker 2: Have we done so much damage to the economy that
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  Speaker 2: it's now going to fall through through the floor. There
• 2:45
  Speaker 2: is some risk of that, and that's why people are
• 2:46
  Speaker 2: talking about, like the market is pricing and virtually one
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  Speaker 2: hundred percent chance of another fifty fifty basis point cut
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  Speaker 2: in November, and there's now serious talk about a seventy
• 2:56
  Speaker 2: five basis point cut, which is the kind of cutting
• 2:59
  Speaker 2: and slashing goes on when big bad things happen, like
• 3:02
  Speaker 2: global financial crisises and things.
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  Speaker 1: Isn't it's so crude, Such a rude, crude tool. So
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  Speaker 1: we go out of control. The fires are burning, hoots, wah,
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  Speaker 1: let's throw more money on it. Let's get those flames
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  Speaker 1: even higher. Okay, So let's get people out of work,
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  Speaker 1: and let's get businesses shut down and let's get everything
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  Speaker 1: sload to a complete and understand still. And that affects
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  Speaker 1: the psyche of a nation and then we're like, hey,
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  Speaker 1: let's go off again. Yeah it is.
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  Speaker 2: It's very blunt, and even the central bank bankers will say, yeah,
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  Speaker 2: it's a blunt instrument. It's it's crude. It does damage.
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  Speaker 2: But the one thing that's got going for it is
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  Speaker 2: that it actually works. And we've seen it work, you know.
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  Speaker 2: So we've seen inflation go up and now it's come
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  Speaker 2: down as predicted because they did the things, and there's
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  Speaker 2: not much in economics that are the tools that actually work.
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  Speaker 2: So that's why the world has remained very focused on it.
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  Speaker 2: I get emails from people all the time with alternative systems,
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  Speaker 2: things we could do, we could we and some of
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  Speaker 2: them aren't crazy, Like you know, it's like you could
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  Speaker 2: actually affect the money supply by moving the rate of kei,
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  Speaker 2: we saver payments up and down, things like that, but
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  Speaker 2: they're politically quite unpalatable and it would be also, I
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  Speaker 2: think difficult for New Zealand to go out on its
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  Speaker 2: own with that kind of thing, while the rest of
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  Speaker 2: the world is stuck on this monetary system. So yeah,
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  Speaker 2: I mean, I think those are the big questions because
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  Speaker 2: at some point, and I think we're going to feel
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  Speaker 2: it in the next year or so. So if unemployment
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  Speaker 2: settles at five whatever and that's historically not that high,
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  Speaker 2: and interest rates are low, and we're going to be
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  Speaker 2: in the situation which they're in the United States a
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  Speaker 2: little bit where you've got the experts saying, no, everything's good,
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  Speaker 2: it's a great economy because the numbers are all in
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  Speaker 2: the right place. But if people aren't feeling that, then
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  Speaker 2: maybe there's something something wrong with the wider system.
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  Speaker 1: It is confidence, isn't it. Yeah, you've got to have
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  Speaker 1: confidence to take on the apprentices, open another store, to
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  Speaker 1: do their addition to the house.
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  Speaker 2: There's a bit of and there's some political leadership to
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  Speaker 2: be done there. I mean, I keep coming back to
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  Speaker 2: it because Christopher Luxen set himself that challenge with the
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  Speaker 2: mojo thing. He wants to get mojo back in the economy.
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  Speaker 2: Well that that is probably his challenge now, is to
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  Speaker 2: try and get that momentum and confidence going the way
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  Speaker 2: that people like John Key. John Key was able to
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  Speaker 2: and and it's a bit of swagger in the economy.
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  Speaker 2: I think I think there's optimistic actually that what there
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  Speaker 2: is that we could get there going next year. There's
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  Speaker 2: been some you know, good regulatory change which you know
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  Speaker 2: they're looking at in the new year, talking about maybe
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  Speaker 2: getting more changes to foreign direct investment, getting a bit
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  Speaker 2: of international capital and talking up free trade deals and
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  Speaker 2: that sort of thing. It's all positive, and we interest
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  Speaker 2: rates will be in the right place, but it's a
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  Speaker 2: lot to expect them to do it on their own
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  Speaker 2: after what we've been through. The economy is so flat
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  Speaker 2: out that you know, people at the moment are probably
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  Speaker 2: looking at a bit of extra money coming back from
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  Speaker 2: the mortgage and just you know, they're cautious because if
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  Speaker 2: you're in that middle age bracket like thirty to fifty,
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  Speaker 2: where you've still got a pretty big mortgage, you might
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  Speaker 2: be worried about your job at this point, you know,
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  Speaker 2: or thinking wage rises are not going to be there,
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  Speaker 2: so you're probably more likely to be saving that money
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  Speaker 2: at the moment than spending it. So it's not translating
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  Speaker 2: to an immediate turnaround in retail. We're just you know,
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  Speaker 2: hopeful that people will be confident and get out there,
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  Speaker 2: but at the moment, house prices and retail remain fairly
• 6:41
  Speaker 2: you know, they haven't really seen much of a bump
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  Speaker 2: from the first rate cut or the tax increase. I
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  Speaker 2: think it's going to take time. You know, people are
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  Speaker 2: sort of in catch up mode.
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  Speaker 1: Well it is that survived to twenty five, isn't it.
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  Speaker 1: And I think with summer and hopefully better weather, and
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  Speaker 1: people have been exhausted by the upside downs and the
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  Speaker 1: swings and roundabouts and the roller coaster ride.
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  Speaker 2: So I'm also very I'm hopeful that we get this,
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  Speaker 2: that it comes with some stability next year, and so
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  Speaker 2: the world doesn't go crazy and there isn't another giant
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  Speaker 2: financial crisis or New Zealand doesn't have some sort of
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  Speaker 2: huge natural disaster that we we could just have six
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  Speaker 2: months of the numbers sort of being in the right
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  Speaker 2: place and then some momentum to build around confidence. So
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  Speaker 2: that would be nice, and then you know, by by
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  Speaker 2: this time night next year, we could be feeling in
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  Speaker 2: a lot a lot better place and looking in a
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  Speaker 2: lot better place. So you know, I can see why
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  Speaker 2: the government, for example, hasn't been soaring away in the
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  Speaker 2: polls because.
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  Speaker 1: It's grim, relentless.
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  Speaker 2: But politically they're doing they're aware that they've got to
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  Speaker 2: be doing the tough stuff early on. I mean they're
• 7:50
  Speaker 2: they're they're taking the winds. They need that and and
• 7:54
  Speaker 2: it's their job to sell it. But they're taking the
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  Speaker 2: windsor Is and released from Nicola Willis this morning saying,
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  Speaker 2: you know that that it's not quite happy days are
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  Speaker 2: here again, but that the you know, to the effect
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  Speaker 2: that the crushing price increases are over. And you know
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  Speaker 2: how much credit governments can take for that, I don't know,
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  Speaker 2: but they certainly, you know, are in charge and they
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  Speaker 2: can they can get They're the ones who get to
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  Speaker 2: put the press release out as things turn in the
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  Speaker 2: right direction. So fair play to that.
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  Speaker 1: Yeah, very quiet from labor. Yeah, not a murmur from
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  Speaker 1: I do ask I see Dillan as Labour sent through anything,
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  Speaker 1: But no, not yet. And they're not saying, oh my god,
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  Speaker 1: where there be all an end all? She said, you know,
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  Speaker 1: there's more work to be done to get the economy growing,
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  Speaker 1: but New Zealanders can be confident we're headed in the
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  Speaker 1: right direction.
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  Speaker 2: Yeah. Well, I think I think that that's some realism.
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  Speaker 2: I mean, you've got to be careful and it's the
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  Speaker 2: same when I'm writing a column or something like that.
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  Speaker 2: You don't want to be like it's hard to be
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  Speaker 2: you know, if she comes out really cheering and saying
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  Speaker 2: everything's great, you know, you're up against the reality for
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  Speaker 2: many people, which it just isn't and they know that.
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  Speaker 2: So there is a lot of work to be done.
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  Speaker 2: But the foundations are there. I guess that's why I'm
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  Speaker 2: feeling more optimistic than usual, that the foundations in terms
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  Speaker 2: of the economic data are sort of there and for
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  Speaker 2: them to do the work and for us to get
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  Speaker 2: out and you know, you can see a pathway for
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  Speaker 2: businesses to start making some decisions about the future which
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  Speaker 2: could add to real growth and create some wealth.
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  Speaker 1: And that's what we need, is real, real productivity, real growth.
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  Speaker 2: Well, I mean, I've been working with the retail end
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  Speaker 2: z and talking to them lately, and it's still very
• 9:35
  Speaker 2: grim in retail. And you know a lot of this,
• 9:38
  Speaker 2: you know, relief around interest rates will just be going
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  Speaker 2: to go. It's sort of just helping them survive. They're
• 9:46
  Speaker 2: getting from the point where they thought many businesses thought
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  Speaker 2: they just weren't going to survive, to just surviving and
• 9:50
  Speaker 2: then hopefully, you know, move a bit further and they
• 9:54
  Speaker 2: can start looking at, you know, what they can do
• 9:58
  Speaker 2: to grow the business, and that's where economic growth will
• 10:01
  Speaker 2: come from. I mean, the Finance Minister can't be too
• 10:03
  Speaker 2: cheery really while we're still sitting in what is probably
• 10:06
  Speaker 2: a recession. We won't get that number until December or
• 10:09
  Speaker 2: November or something like that.
• 10:11
  Speaker 1: Yeah, finishing on a down note.
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  Speaker 2: Oh there we go. No, no, no, good news.
• 10:17
  Speaker 1: There we go. Thank you so much, Business editor. At
• 10:19
  Speaker 1: largely I'm don