'Tug-o-war': Inflation hits 12-month high
Recent figures show inflation has risen to a 12-month high, pushing the annual rate to 2.7%.
Stats NZ data shows the consumer price index rose 0.5% in the June quarter, taking the annual rate to 2.7%.
Key factors contributing to the inflation increase include surging food, power and housing costs, offset by cheaper fuel.
The spike is not expected to halt at least one more Reserve Bank (RBNZ) rate cut.
Consumer prices for the three months ended June were expected to have risen 0.6%.
Economists believe inflation will edge above the Reserve Bank's 1.3% target band by September, but then ease.
Earlier this morning ANZ senior economist Miles Workman said there would be familiar domestic drivers of the latest numbers.
"The main drivers of quarterly inflation are expected to come from the food and housing-related groups - accelerating electricity inflation, but slowing rents and construction."
High export prices for meat and dairy products have driven local food prices, and thus stoked inflation, but at the same time, they are delivering strong export returns that have supported the economy.
ASB senior economist Mark Smith said the spike in inflation was expected to push the annual rate above three percent in the September quarter, but should prove to be temporary.
"We expect the period of three percent-plus inflation to be short-lived. Forthcoming inflation expectations surveys will be critical for ascertaining whether team transitory or team persistence will win the inflation tug-o-war.
"Our core judgement is that the deteriorating global outlook and the large margin of spare capacity will dampen the medium-term outlook for inflation." RBNZ discomfort
Workman said the higher inflation numbers would be uncomfortable reading for the Reserve Bank (RBNZ), which would have to balance between controlling inflation and helping the economy.
"The RBNZ will need to balance any upside surprise in the CPI against the signal from the high-frequency data, which is currently pointing to a stalling recovery and therefore downside risks to the medium-term inflation outlook."
In its most recent monetary review, the RBNZ acknowledged the speed-up in inflation, but also gave a strong hint of a further rate cut at the end of August.
"If medium-term inflation pressures continue to ease as projected, the committee expects to lower the official cash rate further," the RBNZ statement said.
Kiwibank economists said the issue for the RBNZ and interest rate policy was underlying inflation trends.
"Encouragingly, core inflation has been trending south since hitting the 6.7 percent peak at the end of 2022. In the year to March 2025, core inflation fell to 2.6 percent."
They said the economy needed lower rates and they expected another 25 basis-point cut in August.
At this stage, Workman picked the cuts in August, November and early next year would take the cash rate to a low of 2.5 percent.
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RNZ News
3 hours ago
- RNZ News
Is there any way to make a pre-nup 100 percent certain?
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"The test for the court to set aside an agreement is where 'giving effect to the agreement would cause serious injustice'. There are other factors taken into account including the desire for certainty. It is not common for a contract to be set aside unless, for example, there has been some improper dealings in getting a party to sign. On the other hand, a contract entered into many years ago may turn out to be unreasonable in the light of what has happened in the meantime. To allow no leeway for setting contracts aside would be unfair." A contract must follow the formalities set out in the Property (Relationships) Act. Atkin said the main one that must be remembered was that both parties must have independent legal advice. "Failure to do this will of course meant that the contract is on the face of it invalid." Nicola Peart, University of Otago law professor, said a contracting out agreement was still a good way of protecting your assets, even if it was not ironclad. "Assuming the agreement was made with full information and independent legal advice, it can still be challenged if it was seriously unjust at the time or has become seriously unjust at a later point in time." And this is me talking - this is probably a good thing, overall. If you're living together as a couple and your circumstances change, it's reasonable that what was fair at the outset might no longer be. It's a good idea to get your own legal advice about your individual circumstances. We are currently settling an estate. The deceased had a credit card to a third-party lender, a Q Card, not a Q MasterCard. I cannot find any mention of estate obligations should the holder die, which I have seen with other credit cards. Does this mean the estate is not obligated to pay the bill? Michelle Pope, a principal trustee at Public Trust said generally, if a credit card account was held only in the name of the person who died, it would become a debt of the estate, to be paid from their assets. "However, if the account was in joint names, the responsibility for the debt usually passes to the surviving account holder. We're assuming the lender has already been contacted and the terms and conditions have been reviewed. If those terms don't specify what happens when someone dies, then the debt would usually be treated as one that needs to be settled." In 2007, I separated from my ex-husband and started a relationship with my new partner. He said to me that he had put his property and business into a trust so no other partners could get any of his property. I was OK with that because I felt going forward he would look after me if I became his wife and the mother of his children. Fast forward to 2016 I received $135,000 from my mum's inheritance and 2018/2019 $130,000 from dad. We had been renovating this beautiful 100-year-old house and property in which we used my inheritance to renovate it. I was happy as this was our family home and it was lovely, until 2020 when he started an affair and we separated. Do you have any suggestions on how I can get my inheritances recognized in our financial settlement case? Peart says there is a pathway ruling on general equitable principles, in particular the "constructive trust", which has been used to compensate former partners who have made substantial contributions to assets held in a trust where the court is satisfied that she had a reasonable expectation that she would share in the value of her contributions and it is reasonable for the trustees to yield an interest. She said, if you were married, section 182 of the Family Proceedings Act could be a way to get a settlement. 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There are other points here but, in short, the relevant law where there is a trust is complex and not consistent. The Law Commission has accepted that the law needs to be reformed but the government has shown no signs so far of implementing the Law Commission's recommendations. "Now, what about the inheritance? There is no direct way under the Act of recognising the inheritance. Any claim would be against the trust. If the inheritance money had been packaged as a loan to the trust, then the trust would be in debt to the person who lent the money. However, most people in relationships are unlikely to think about doing this. Another possibility is that the heir can make a claim under laws that apply generally, not just to relationships. A genuine possibility is to claim what the law calls a constructive trust in relation to the formal trust. The latter would have to account for the contribution made by way of the inheritance but success here is by no means guaranteed and what the value of a constructive trust would be is subject to all the factors in the case. Legal advice would be needed and one would hope that a satisfactory negotiated settlement can be reached with the trustees. Trouble is that the ex may well be one of the trustees and may play hard to get."
NZ Herald
15 hours ago
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Otago Daily Times
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