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Nick Tuffley: ASB Chief Economist on the inflation rate coming into target range at 2.2% · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: How big will Adrian or go on rate cuts next month?
• 0:03
  Speaker 1: That is the question on everybody's lips. He's away on
• 0:06
  Speaker 1: business at the IMF currently, apparently. But after yesterday's lowest
• 0:10
  Speaker 1: annual inflation figure in three and a half years, back
• 0:13
  Speaker 1: in the safe zone at two point two percent, could
• 0:16
  Speaker 1: we see a seventy five basis point cut by Christmas? Gosh,
• 0:20
  Speaker 1: we're all excited, aren't we. Nick Tuffley is the asbchief economist.
• 0:22
  Speaker 1: He's with us this morning. Hey, Nick, morning, Hey, So
• 0:26
  Speaker 1: I mean this, first of all, this is great news,
• 0:28
  Speaker 1: isn't it that we're back in the safe zone? But
• 0:30
  Speaker 1: how safe are we? How pre curious is.
• 0:32
  Speaker 2: That we do think that inflation will be remaining very
• 0:37
  Speaker 2: close to two percent now over the next couple of years.
• 0:40
  Speaker 2: So if anything needs a chance that inflation could each
• 0:43
  Speaker 2: a bit below two percent at some point as we're
• 0:46
  Speaker 2: heading towards the end of twenty twenty five twenty twenty six,
• 0:49
  Speaker 2: we're really back in the zone now.
• 0:52
  Speaker 1: And it would take something quite dramatic to get us out,
• 0:55
  Speaker 1: because I mean, you look at the insurance, the rents,
• 0:58
  Speaker 1: the rates that will spected to keep going up, right,
• 1:01
  Speaker 1: But the international story is a different one. What about
• 1:05
  Speaker 1: if oil spiked because of the Middle East or something
• 1:08
  Speaker 1: like that.
• 1:10
  Speaker 2: Well, we still have that mixture where some of that
• 1:12
  Speaker 2: domestic inflation is still pretty high, and that will get
• 1:15
  Speaker 2: will eat a little bit going forward, and that will
• 1:16
  Speaker 2: help keep things down. We have had things like oil
• 1:19
  Speaker 2: prices falling back at times over the last quarter, which
• 1:24
  Speaker 2: helped keep inflation low at the moment. But yes, there's
• 1:26
  Speaker 2: always the watt if it will take a pretty significant
• 1:29
  Speaker 2: spike in the price of oil to push things up,
• 1:32
  Speaker 2: and the Reserve Bank won't necessarily rush to turn around
• 1:35
  Speaker 2: and start putting rates up or slow the pace down.
• 1:38
  Speaker 2: Because oil prices are something that can't control. They tend
• 1:41
  Speaker 2: to have a short term impact. But the Reserve Bank
• 1:44
  Speaker 2: would worry about so sizeable and lifting oil prices, whether
• 1:48
  Speaker 2: there are some lingering impacts created by just the impacts
• 1:52
  Speaker 2: that it has on transport and wider costs.
• 1:55
  Speaker 1: All right, I'll stop worrying about the oil thing now
• 1:57
  Speaker 1: and then Nick, thank you. What's up with the domestic
• 2:00
  Speaker 1: air travel? The price is down by eleven percent? I
• 2:03
  Speaker 1: was reading that going really eleven percent.
• 2:07
  Speaker 2: Well, we do find that air travels it's quite seasonal,
• 2:10
  Speaker 2: so it does go up and down from one quarter
• 2:14
  Speaker 2: to the next as we move in and out of
• 2:15
  Speaker 2: the sort of tourism season. We did see quite a
• 2:19
  Speaker 2: spike in sort of airfare prices in that sort of
• 2:24
  Speaker 2: immediate post COVID period, but we have now started to
• 2:27
  Speaker 2: see some settling down in that area, and you can
• 2:30
  Speaker 2: see that in accommodation costs as well, where the trend
• 2:33
  Speaker 2: has been that things have started to ease back after
• 2:35
  Speaker 2: that initial nudge that we saw.
• 2:38
  Speaker 1: Nick. Thanks very much for you update this morning. Really
• 2:40
  Speaker 1: appreciate it, Nick Tuley, chief economist at ASB Bank. We're
• 2:44
  Speaker 1: in the zone and it sounds like we're going to
• 2:46
  Speaker 1: stay there for the foreseeable, which is great news. For
• 2:49
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