The Government is being called upon by the Opposition to "take responsibility" for contributing to 32-year high annual inflation, but the Finance Minister says the latest figures reflect an "extremely volatile" global environment.
The Consumer Price Index (CPI) rose 7.3 percent in the year to June 2022, the largest yearly jump since 1990 and up from the 6.9 percent lift experienced in the March quarter. The biggest drivers were housing - including construction prices and rents - and fuel prices.
Domestic or non-tradeable inflation - meaning goods and services that don't face foreign competition - hit 6.3 percent, the highest since that began being tracked in 2000. Tradeable inflation - those goods and services influenced by foreign markets - was 8.7 percent, also the highest ever.
National's finance spokesperson Nicola Willis said that all-time high domestic inflation should prompt the Government to make urgent changes.
"Today's data shows what any Kiwi family can confirm - rising prices are smashing household budgets. With every sector of the economy straining under cost pressures, there's nowhere to hide from Labour's cost of living crisis," Willis said.
"Labour keeps blaming international events like the war in Ukraine but refuses to take responsibility for their policy failures at home."
She wants to see the Government tackle "bottlenecks in the economy that are worsening inflation", change the country's immigration settings to help address labour shortages and not create additional costs for businesses. The Reserve Bank would have a single focus on price stability under National, which also supports adjusting tax thresholds to inflation
"It's not as if this problem has crept up on them. Inflation has now been outside the Reserve Bank's target range for 15 months running. If the Government doesn't start taking it seriously the risk is that it could be here for many more months to come.
"Lurching from crisis to press conference with knee-jerk responses isn't good enough. Kiwis deserve a Government that can present a plan on the economy that enables everyone to get ahead, instead of relying on temporary band-aid payments and gimmicky policy making."
That's a reference to several of the Government's recent cost-of-living support announcements that the National Party have called "band-aids".
On Sunday, Finance Minister Grant Robertson announced cuts to the Fuel Excise Duty, Road User Charges and public transport fares would be extended until January 31. Modelling from Treasury showed the policy would reduce inflation by 0.5 percent in the June quarter.
At the May Budget, the Government unveiled a $27 a week payment for three months from August to Kiwis who earn less than $70,000 and don't receive the Winter Energy Payment. Treasury recommended against that "broad-based payment", saying it could "add to inflationary pressures", but this was mitigated by it being temporary.
ACT leader David Seymour is also wanting the Government to "take some responsibility".
"ACT called the cost of living crisis in December last year, but denial has stopped the Government from acting," he said.
"First the Government has said there is no crisis. Then it was only temporary. Then there really was a crisis but don't worry because other countries have one too. Now this Government is doing what it does best; gesture politics with a fuel tax discount here and a one-off payment there that will make no difference to the underlying problem."
He said ACT would cut spending by $6.8 billion, simplify the tax system, and reset the Reserve Bank Monetary Policy remit "with real consequences" if the inflation target of 1-3 percent is missed.
In a statement on Monday, Robertson said New Zealand "is not alone in experiencing higher prices" with inflation above 9 percent in the United Kingdom and the United States.
"Global factors such as the ongoing impacts of the pandemic on supply chains and the war in Ukraine are affecting prices, particularly those for fuel and building materials, and this means demand is not being met, and having a sizeable effect on New Zealand households and businesses," Robertson said.
"We recognise that this is a tough time for New Zealanders and the rise in the cost of living is making it hard for many. We have taken steps to ease some of that pressure on households, particularly those on lower incomes."
He said the Government had acted with its cost-of-living payments, a suite of measures on April 1 increasing the likes of minimum wage, benefits and other supports, and its cut to transport taxes and fares.
Noting that construction was labelled by StatsNZ to be a key driver of the annual inflation figure, ACT's housing spokesperson Brooke van Velden said more needs to be done to address plasterboard supply issues.
The Government announced in June that it was convening a taskforce to examine what can be done to sort shortages and had also written to Fletcher Building, the country's largest supplier of GIB, to not enforce some of its trademarks.
"Plasterboard is a sandwich of plaster and cardboard. What first-world, industrialised country gets itself into such a pickle where we have a nationwide shortage? An overly bureaucratic one and it needs to stop, today," said van Velden.
"Instead, Labour's farcical response was to establish a plasterboard task force which has predictably achieved nothing."
ACT would introduce a register allowing suitable substitute materials to be used in New Zealand.
Reacting to the CPI release, ASB senior economist Mark Smith said inflation looks to have peaked, but the outlook "is still highly uncertain and far too high for the RBNZ's comfort".
"We have long been wary of the risk of annual CPI inflation staying outside the inflation target for considerably longer than expected by the RBNZ, and today's prints supports the view of high inflation becoming increasingly entrenched."
Jarden economist John Carran believes the inflation news is "likely to get better going forward".
"First, there are clear signs global inflation pressures are abating. Global commodity prices have been declining steeply in recent months. This may soon flow through to lower prices for petrol and tradeable goods, like food.
"Global freight costs have also been coming down. While it may take a while for this to flow through to New Zealand, it could start to take the edge off prices for imported goods as the year progresses."
Robertson on Monday stressed that while the peak may have been hit, inflation may stay at a higher than usual level for a while.
"We are well positioned to respond with unemployment at a record low and debt at levels substantially below countries we compare ourselves with and we will continue to support New Zealanders to get through this challenging time."
The Budget Economic and Fiscal Update (BEFU) in May showed inflation would remain outside of the Reserve Bank's targeted range until 2025. It said inflation was the result of strong domestic demand, as well as global factors like supply chain issues and the war in Ukraine.
In its May Monetary Policy Statement (MPS), the Reserve Bank said it expected inflation to fall to 4.4 percent in 2023, 2.5 percent in 2024 and 2 percent in 2025.
