Latest / Early Edition with Ryan Bridge / Brad Olsen: Infometrics Principal Economist on food prices rising 5% in the year to August

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Brad Olsen: Infometrics Principal Economist on food prices rising 5% in the year to August · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Food prices up five percent in the year to August.
• 0:03
  Speaker 1: The dairy main driver mel cup sixteen percent, cheese up
• 0:06
  Speaker 1: twenty six percent, butter up thirty two percent, meat, poultry,
• 0:09
  Speaker 1: fish all up eight point one percent. Brad Olson in
• 0:11
  Speaker 1: for Metrics with us this morning. Brad, good morning to you.
• 0:14
  Speaker 2: Good morning. Hey.
• 0:15
  Speaker 1: Did you see the global dairy trade auction numbers overnight?
• 0:17
  Speaker 2: Your thoughts I did a little bit down, I think,
• 0:21
  Speaker 2: probably highlighting that look, we're still seeing our across the
• 0:24
  Speaker 2: globe a bit of trying to find where things are
• 0:27
  Speaker 2: going to level out in terms of both supply and demand.
• 0:29
  Speaker 2: But I think also again on one hand, encouraging for
• 0:34
  Speaker 2: households in the sense that you haven't seen in the
• 0:37
  Speaker 2: food price data but is basically been flapped the last
• 0:40
  Speaker 2: three months. But at the same time, if you're starting
• 0:43
  Speaker 2: to see the GDT come down, it does just make
• 0:45
  Speaker 2: you a bit nervous about those very high commodity prices
• 0:48
  Speaker 2: that we're getting at the moment. If the GDT continues
• 0:51
  Speaker 2: to fall, then yes, you might have ever so slightly
• 0:54
  Speaker 2: cheaper butter prices, but the primary sector might not be
• 0:56
  Speaker 2: earning quite as much either.
• 0:58
  Speaker 1: Yeah, but they are expected to I mean either hold,
• 1:00
  Speaker 1: they should actually get to new record highs. According to
• 1:04
  Speaker 1: some economists.
• 1:07
  Speaker 2: The yeah, well, I mean we're certainly hopeful of those
• 1:09
  Speaker 2: better times to come. But again, I mean, you see
• 1:11
  Speaker 2: that coming through in the food price data released yesterday,
• 1:15
  Speaker 2: which does highlight that from a household perspective, you're still
• 1:18
  Speaker 2: seeing some pretty big costs. Interestingly, though, again we're still
• 1:21
  Speaker 2: seeing that those cost pressures are coming through in a
• 1:24
  Speaker 2: more contained fashion. So you know, go back a couple
• 1:27
  Speaker 2: of years when inflation was running rampant, and you really
• 1:29
  Speaker 2: still quite a broad based level of inflation. Just about
• 1:32
  Speaker 2: everything was increasing in price at a fairly rapid pace. Nowadays,
• 1:37
  Speaker 2: it's not everything. It's just that it's quite a few
• 1:39
  Speaker 2: of the high frequency items that you notice a whole
• 1:42
  Speaker 2: lot more. It's the fact that you know, minces increased significantly,
• 1:46
  Speaker 2: steak all of your dairy. But we've also seen in
• 1:49
  Speaker 2: the latest food price numbers just a few bits of easing.
• 1:53
  Speaker 2: The likes of olive oil prices, which we're very high
• 1:55
  Speaker 2: a couple of years back, are now starting to come down.
• 1:58
  Speaker 2: The likes of coffee prices also easing, ever so slightly,
• 2:01
  Speaker 2: still elevated, still expensive, but continuing to sort of shift
• 2:05
  Speaker 2: in the right direction, you'd.
• 2:06
  Speaker 1: Say, outside bred, outside of food. We are seeing rents
• 2:09
  Speaker 1: come down though, right, So does that sort of I
• 2:11
  Speaker 1: mean I see ASP's come out and said they probably
• 2:14
  Speaker 1: are picking two point nine percent for September, which is
• 2:17
  Speaker 1: below forecast of the RBNZ. So is there actually a
• 2:20
  Speaker 1: silver lining to all this?
• 2:22
  Speaker 2: Well, I think it's just so mixed depending on exactly
• 2:24
  Speaker 2: who you are and what you're buying. Yes, we've seen
• 2:27
  Speaker 2: that that rental pressure has really eased back. That's generally
• 2:31
  Speaker 2: a lot more concentrated in our urban centers, Auckland and
• 2:34
  Speaker 2: Wellington in particular, So if you're renting in the regions,
• 2:37
  Speaker 2: you're probably still not seeing all that much of a
• 2:39
  Speaker 2: better sort of position there. But the one that worries me,
• 2:43
  Speaker 2: I think the most. We spend a lot of time
• 2:44
  Speaker 2: talking about rent and about food, but it's the energy
• 2:47
  Speaker 2: prices that really get me. The fact that electricity and
• 2:50
  Speaker 2: gas are up something like eleven and fourteen percent year
• 2:52
  Speaker 2: on year respectively. Those are some pretty big gifty increases
• 2:56
  Speaker 2: coming through for what are fairly vital costs. You can't
• 2:59
  Speaker 2: choose not to have electricity or gas. You need to
• 3:02
  Speaker 2: be able to sort of heat your home and cook dinner,
• 3:04
  Speaker 2: So all of those sort of pressures show that look,
• 3:06
  Speaker 2: it's mixed out there. But even then getting towards the
• 3:09
  Speaker 2: top of the target band, yes, the reserve banks still
• 3:12
  Speaker 2: got more scope to cut things, but realistically that's still
• 3:16
  Speaker 2: an uncomfortable level of inflation for everyone to be having
• 3:19
  Speaker 2: to handle.
• 3:20
  Speaker 1: Appreciate your time, Brad brad Olson, Informetric's chief economists.
• 3:24
  Speaker 2: For more from early edition with Ryan Bridge. Listen live
• 3:27
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• 3:30
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