Latest / Best of Business / Perspective with Ryan Bridge: What do the latest inflation numbers really mean for the 'squeezed middle'?

Transcript

Perspective with Ryan Bridge: What do the latest inflation numbers really mean for the 'squeezed middle'? · Best of Business

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• 0:16
  Speaker 2: Nikola Willis will like this story on inflation, the number
• 0:19
  Speaker 2: that's come out today. She'll like the story that the
• 0:21
  Speaker 2: number is telling because and remember her target audience is
• 0:25
  Speaker 2: the squeezed middle. This is the battleground. This is the
• 0:28
  Speaker 2: battle for the soft center for the election labour ving
• 0:31
  Speaker 2: national this is what they're going after. And the stats
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  Speaker 2: n Z number for the year to June this is
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  Speaker 2: for the year to June quarter three point two percent,
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  Speaker 2: So prices are up for you average Kiwi family. That
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  Speaker 2: doesn't sound like it's a good story, but for the
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  Speaker 2: one third of Kiwis who own a home, aka the
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  Speaker 2: squeezed middle, the number is better than it could have been.
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  Speaker 2: And that's because this number is based on the household
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  Speaker 2: Living Cost Price Index, not the CPI. The CPI is inflation.
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  Speaker 2: That's four point one percent. This one's lower. This is
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  Speaker 2: only three point two percent. Why this takes into with
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  Speaker 2: count the cost of interest payments on mortgages, and the
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  Speaker 2: mortgage interest payment story is a good one. They are
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  Speaker 2: fifteen percent cheaper on these numbers, so imagine how bad
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  Speaker 2: this number could have been if interest rates hadn't fallen,
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  Speaker 2: if the Reserve Bank didn't have the headroom to cut rates.
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  Speaker 2: You can see where I'm going with this. If you're
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  Speaker 2: an average home owning family with two kids in New Zealand,
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  Speaker 2: you know how important your mortgage is to your happiness.
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  Speaker 2: The smaller it is, the better you feel. So Nikola
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  Speaker 2: Willis will take this number as good for two reasons. One,
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  Speaker 2: she'll claim credit for helping cut your mortgage by fifteen percent,
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  Speaker 2: even though that's the Reserve Bank, but she'll say she
• 1:49
  Speaker 2: created the environment. Two, she'll blame Trump for the costs
• 1:53
  Speaker 2: going up, which is not untrue. A third of the
• 1:56
  Speaker 2: annual price hike is down to petrol, and that's Trump
• 1:59
  Speaker 2: and Iran. This helps National because they are running this
• 2:02
  Speaker 2: election not only on their record, which is, let's be honest, patchy,
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  Speaker 2: but against labors. They're playing the don't put it all
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  Speaker 2: at risk card, and they're playing that card very hard.
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  Speaker 2: You would have heard it with Nikola Willis on the
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  Speaker 2: show last night. The only problem with these numbers is
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  Speaker 2: the fact that they're backwards looking. So yes, interest rates
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  Speaker 2: have been coming down, they are climbing again. Westpac started
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  Speaker 2: with fixed rates yesterday and you can bet your bottom
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  Speaker 2: dollar the rest will soon follow.
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