Government urged to adopt five-point plan to fight inflation
The recent OCR hike and new food price data highlight the worsening cost-of-living crisis, according to National Finance’s spokesperson Nicola Willis.
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“Inflation under this Labour government is so out of control that the Reserve Bank is having to increase interest rates faster than at any previous time in New Zealand’s history,” Willis said. “This is the first time ever that the bank has increased the official cash rate by 50 basis points three times in a row.”
Willis said the dramatic tightening means anyone due to re-fix their mortgage in the coming months “will get hammered by rapidly rising borrowing costs.”
“Under Labour, a family with an 80% mortgage on an average priced home will pay nearly $350 more per week in interest payments today than when Labour came to office,” she said.
Adding to the stress for families, Willis said, is the recently released Statistics New Zealand food price data which showed a 7.6% increase in grocery prices compared to a year ago.
Read next: Cost-of-living in New Zealand reaches record high – Stats NZ
“Milk now costs 10.4% more than last year, yoghurt 14.4% more, and potato crisps are up 11%,” she said.
Willis noted that wage growth was not keeping pace with rapidly rising prices, with the cost-of-living crisis set to bite deeper.
“Labour has no plan to do its bit to address the domestic drivers of inflation,” she said. “Instead, its economic mismanagement has made the cost-of-living crisis worse. Documents I have obtained show Treasury warned the finance minister in March that if he further ramped-up government spending that would worsen inflation and drive up interest rates. Instead of heeding this advice the finance minister launched a record spend-up in the May Budget. The Government’s addiction to spending and its unwillingness to fix immigration settings are making things worse for struggling Kiwis, putting more pressure on inflation and interest rates.”
Willis said the government should adopt National’s five-point plan to fight inflation: return the Reserve Bank to a single focus on price stability, reduce costs on business, remove bottlenecks in the economy, restore discipline to government spending, and prioritise tax relief for workers.
