The scale of the cost of living pressures facing Kiwis will become clearer on Thursday with the release of the latest inflation data.
New Zealand's major banks agree the March 2022 annual inflation figure will be at 7 percent or higher, above the 5.9 percent rate recorded in the year to December 2021.
That was the largest yearly increase since June 1990, but didn't include the impact of the war in Ukraine - which has had a significant effect on fuel prices - or the worst of the Omicron outbreak, both of which have had major repercussions for New Zealanders' wallets.
ANZ, which correctly picked last week that the Reserve Bank would lift the official cash rate (OCR) by 50 basis points, is forecasting inflation to come in at 7.4 percent when the latest Consumer Price Index (CPI) figures are released on Thursday.
"Uncertainty is extreme right now," ANZ said. "Not only did the Omicron wave hit us in [quarter one]; the tragic Russian invasion of Ukraine has created turmoil in global commodity markets. Oil prices have surged, and global food price inflation is rising aggressively."
It expects tradable inflation to lift 8.9 percent due to the global environment, while non-tradables (domestic) to be up 6.5 percent.
"This is the kind of inflation that sticks around, and with labour market tightness currently extreme and very widespread, wage inflation is set to accelerate this year. That will give even more impetus to domestic inflation, ramping up pressure on the RBNZ to continue raising interest rates."
The RBNZ's 50 basis point lift to the OCR last week was in response to rising inflation and the largest single jump since 2000. Over the medium term, the RBNZ is required to keep inflation between 1 and 3 percent. It's expected to hike the OCR again at the next Monetary Policy Review in May.
In its forecast of the CPI data, BNZ said on Tuesday that the thrust of Reserve Bank Governor Adrian Orr comments to the International Monetary Fund (IMF) this week were about "the necessity of containing inflation". In it, Orr said central banks needed more support in the form of "more targeted effective fiscal policies".
BNZ is predicting annual inflation to be at 7.1 percent.
"A number in excess of 8 percent is not out of the question," the bank said last week. "It seems we are raising our inflation forecasts on an almost daily basis as oil prices surge, food prices defy expectations and generalised cost pressures feed through into selling prices."
ASB is going with 7.3 percent, while Westpac is picking 7 percent.
"Inflation has been driven by a number of forces all hitting at the same time: global supply disruptions resulting from COVID, strong demand in the local economy, and more recently a surge in oil and other commodity prices in reaction to the Ukraine invasion," Westpac said on Tuesday.
"Many of these are supply-side shocks that the RBNZ can’t do anything about directly. Their concern instead is about what this could mean going forward."
Prime Minister Jacinda Ardern, speaking from Singapore on Wednesday, pointed to the international factors when discussing the upcoming CPI numbers.
"Unfortunately, we do know that we are in a particular point with the pressures that New Zealand is experiencing externally, the supply constraint issues… the war in Ukraine, it is having an impact," she said.
"We are expecting that impact to be felt this quarter and we are, of course, concerned about that."
Asked what it's done about combatting the soaring cost of living, the Government has pointed to its suite of minimum wage, benefit rates and tax credit changes on April 1 as well as how it slashed fuel excise tax and halved public transport costs.
Independent economist Cameron Bagrie told AM it doesn't matter "whether it's 6, 7, or 8 [percent]".
"Whichever way you slice and dice it, it's hellish of a high number," he said.
"If you look at your benchmark compared to where wages are moving… the Labour Cost Index is going to be around 3 percent; so 3 percent take away 7, your cost of living is -4. So if you look at the typical household or wage earner out there at the moment, you're going back to the churn of about 4 percent - which is a pretty big hit to take over 12 months."
He described inflation as "a thief that literally siphons money out of your pocket".
Asked on Tuesday whether he thinks New Zealanders blame the Government for inflation, acting Prime Minister Grant Robertson said he did not.
"I think that New Zealanders understand that this is a global phenomenon. They only need to see the headlines every night where we hear inflation in the US has gone over 8 percent, inflation in the UK has gone over 7 percent."
The March ANZ Business Outlook survey said inflation is "moon-bound", pointing to a "remarkable" net 96 percent of businesses who reported facing higher costs. All of those surveyed said that meant they intended to raise prices of goods and services.
