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Business commentator Nicholas Pointon
Business commentator Nicholas Pointon

RNZ News

timea day ago

  • Business
  • RNZ News

Business commentator Nicholas Pointon

Company failure rates are on the up, Nicholas explains what the reasons behind this might be. What are land lease communities? And why they work in Australia but have failed to be picked up in New Zealand. Nicholas also discusses call from iwi who want to invest in Kiwibank, and Spark's chair's long tenure is being questioned. Nicholas Pointon is a senior journalist at the National Business Review. To embed this content on your own webpage, cut and paste the following: See terms of use.

Inflation Hurts. When Will It End?
Inflation Hurts. When Will It End?

Scoop

time2 days ago

  • Business
  • Scoop

Inflation Hurts. When Will It End?

Press Release – Kiwibank The rapid deceleration in imported inflation, which helped to pull down headline, is reversing course. Were no longer importing deflation. Annual tradables inflation lifted from 0.3% to 1.2%. The 4.2% increase in food prices accounted for 28.5% of … Kiwi inflation lifted to 2.7%yoy from 2.5%yoy over the June quarter. But context is key. A reacceleration in imported inflation is driving the move higher. It was food and electricity that continues to bite at our back pockets. Domestic price pressures are cooling. This is the first test for an August cash rate cut. Inflation will likely push further from here. But more important to policy is underlying inflation, which remains within the RBNZ's target band. Spare capacity within the Kiwi economy is keeping downward pressure on domestically generated inflation. Downside risks to medium-term inflation remain. Whether that's a consequence of a slowdown in global economic growth, or a diversion of trade marked at a discount. There is still a case for more accommodative interest rate settings. Kiwi inflation accelerated over the June quarter. Annual headline rose to 2.7% from 2.5%. It's a move in the wrong direction. But context is key. A strengthening in imported inflation is driving headline higher. But domestic price pressures, on balance, continue to cool. And most importantly, the underlying trend in consumer prices is weak. Excluding the volatile movements in food and fuel, annual core inflation lifted to 2.7% from 2.6%. A move that was better than many had feared, and one that will improve into next year. For now, there's little risk this bout of high inflation will persist. Especially given that there's still significant spare capacity in the Kiwi economy. Today's report showed that price increases are becoming less extreme. The proportion of goods and services that increased in price was little changed at 54%. However, the June quarter saw a greater share of the basket record a decline in price, from 30% (185 items) to 35% (210 items). A larger proportion of items either remained flat or increased in price by less than 3 percent in the 12 months to June 2025. The rapid deceleration in imported inflation, which helped to pull down headline, is reversing course. We're no longer importing deflation. Annual tradables inflation lifted from 0.3% to 1.2%. The 4.2% increase in food prices accounted for 28.5% of the lift in headline inflation. Domestic inflation, in contrast, continues its (slow) move south. Annual non-tradables inflation pierced below 4% for the first time in four years to 3.7%. Domestic inflation has fallen some way from its 6.8% peak in 2023, but it is still sitting high above the long-term average (~3%). And that's despite such a weak domestic economy. Such persistence is due to the lingering strength in administered prices. Council rates and insurance costs are running well above historic averages, up 12.2%yoy and 6%yoy, respectively. And households are now contending with high electricity charges, climbing to 9.1%yoy. If we exclude housing-related inflation, domestic inflation prints at 3.5% – the lowest since December 2021. Given excess capacity still sloshing in the economy, domestic inflation should continue to head lower. But the pace of easing is being dictated by factors largely outside of the RBNZ's control. That's a frustration. Inflation will likely push higher in the coming quarter. But like any spike, it will come back down. The economic undercurrents are weak. For monetary policy, the underlying trend in inflation is what matters most. Monetary policy settings today, are set for an economy 12-to-24 months down the track. It takes a long time for movements in the cash rate, and other lending rates, to influence the economy. So, a knee-jerk reaction to a couple of internationally charged price shocks is not on the cards. The RBNZ's job is to look through volatile movements, and set policy for late next year. And in late 2026, inflation is set to slow below the mid-point of the target band (2%). It's why we focus more on core. Core measures of inflation strip out the volatile price movements. Encouragingly, core inflation has been trending south since hitting the 6.7% peak at the end of 2022. At 2.7% (in the year to June 2025), core inflation remains within the RBNZ's target band. Our forecast stirps out the spikes and looks at slack in the economy. And there's a lot of slack, especially in the labour market. Our best guess, incorporating the damage inflicted through the recession we're still crawling out of, has inflation falling to 1.8% next year. If realised, the RBNZ continues to overcook. And we continue to advocate a stimulatory setting of 2.5%.

Mortgage rates drop, but further relief unlikely as OCR stabilises
Mortgage rates drop, but further relief unlikely as OCR stabilises

NZ Herald

time3 days ago

  • Business
  • NZ Herald

Mortgage rates drop, but further relief unlikely as OCR stabilises

At 5.1%, unemployment is the highest since 2016 (excluding the Covid-era) and it's expected to increase a little further before stabilising. This level of labour market slack usually keeps a lid on domestic inflation pressures. The RBNZ isn't done with cutting rates just yet, but an important insight borrowers should take from last week's decision is that we are nearing the end of the easing cycle. Of the big four Australian banks and Kiwibank, forecasts for where the OCR troughs range from 2.50% to 3%. The most recent RBNZ projections imply a floor of either 3% or 2.75%, with the odds slightly tilted towards the latter. Whoever you choose to believe, it's clear the bottom is getting closer. For most of us, this matters because of what it means for borrowing costs and the household budget. Mortgage rates have already fallen a long way. The two-year rate is 5% right now, down from 7% at the end of 2023. It's important to understand that your mortgage rate isn't driven solely by moves in the OCR. Global economic conditions, wholesale interest rates, bank funding costs and competition among lenders can also have a big influence. There's still a strong relationship though, especially for the shorter mortgage terms. In the past six months the gap between the OCR and the two-year rate has been about 1.5%, well below the average since 2017 of 2.2%. That tight spread could mean there's less room for mortgage rates to fall, even if we do see another OCR cut or three. The outlook could change if we experienced a global economic shock, or if inflation proved more persistent than expected. However, right now, the base case points to limited further relief. As our biggest lender, ANZ likely has some useful insights about the mortgage market. Its latest monthly property report suggests the two-year mortgage rate will bottom at 4.9% later this year, only marginally below current levels. It has the one-year slightly lower at 4.7%, while the three- and five-year rates don't dip below 5% in its projections. This conservative outlook is notable, given ANZ (with Kiwibank) sees the OCR falling to 2.50%. The upshot here is that most of the downward move in mortgage rates is behind us. I wouldn't say this is 'as good as it gets' for borrowers, but we're much closer to that point than many think. The next OCR decision is due in late August and importantly, this one will also see the release of a new forecast set. This is the natural opportunity for the next cut, but there are a few things to monitor between now and then. Next week's June quarter consumer price index (CPI) report is one, while the labour force report on August 7 will also be crucial. Assuming those are close to RBNZ projections, there's a decent chance we see a 0.25% cut at that time. That would take the OCR to 3%, close to neutral and where it sat comfortably for six years from 2010 to 2015. The focus will then shift to whether that's as low as it goes this cycle. With mortgage spreads already compressed relative to recent years and the OCR within neutral territory, borrowers hoping for much lower rates will be left disappointed. Mark Lister is Investment Director at Craigs Investment Partners. The information in this article is provided for information only, is intended to be general in nature, and does not take into account your financial situation, objectives, goals, or risk tolerance. Before making any investment decision Craigs Investment Partners recommends you contact an investment adviser.

Opinion: The North Shore is Auckland's untapped opportunity to host big events
Opinion: The North Shore is Auckland's untapped opportunity to host big events

NZ Herald

time6 days ago

  • Business
  • NZ Herald

Opinion: The North Shore is Auckland's untapped opportunity to host big events

When councils invest in community events, they promote wellness and connections through shared experiences. It breaks down barriers in communities and brings them together for social cohesion. Small local businesses absolutely deserve this. They've been through a rollercoaster of challenges and triumphs over the past few years. Community events bring in people from different corners of the city, and they're arriving prepared to spend and support local. Funding is a direct way for councils to support their residents with social wellbeing, as well as support local businesses – it's a win-win. Auckland, in particular, needs more focus on supporting the North Shore with event funding and basing events there. We see millions being spent on events in the central city and South Auckland. For instance, the Moana Festival, Diwali, the Lantern Festival, music events, rugby, league, Auckland FC, theatre shows, arts festivals, the International Comedy Festival. They're all central and receive council funding and support. Meanwhile, the north of the Harbour Bridge has very little event support in comparison. At the end of this month, the Takapuna Business Association is staging the Takapuna Winter Lights Festival, a popular event that attracts people of all ages from all parts of Auckland. Since the first Takapuna Winter Lights Festival in 2019, event numbers have continuously soared. What started with a modest 5000 attendees in its inaugural year has grown to more than 50,000 attendees last year. This kind of growth signals the need for more events like these on the North Shore. Recent Kiwibank research revealed a shift in how Kiwis are spending, with many preferring to spend their hard-earned money on experiences over physical items. Last year, consumer spending in Takapuna over the four-day event was more than $2.5 million. Compared with the year prior, that's a 20% increase in consumer spending. Terence Harpur is the CEO of the Takapuna Business Association. It's the small local vendors and businesses on the North Shore that benefit the most from these events. Some 86% of local businesses said they felt the event had a very positive impact on the Takapuna region, and 66% said the impact of the event was very positive to their business. We're grateful to the council for providing some funding ($44,000) to the Takapuna Winter Lights event, but when you compare that to other events, it's not a huge amount and can only get you so far. We're lucky to have some incredible sponsors who see the positive impact this event has on the precinct. Over the summer, Tātaki Auckland Unlimited reported $31.9 million made from events between November and March. But when you look at the figures listed on their website, there are very few events listed in the North Shore, let alone funded to the same levels. Our North Harbour Stadium can host up to 25,000 people, but we rarely see any major events being hosted there. This is such a lost opportunity and is a prime place to host larger events on the Shore at a venue that already has the facilities and infrastructure ready and waiting to host them, and a North Shore population keen to attend. Recently, Auckland Council decided to continue with the same council operator at the North Harbour Stadium, despite community calls for a new direction – was this the right move? Only time will tell when we see what kind of events are programmed into this venue. With the governing body of council cutting funding to Tātaki Auckland Unlimited's events budget, going from $15m to $8m a year, and cuts to support for regional event funds and local board funding, the council really needs to be more considerate with the areas it decides to invest in. As I said earlier, it needs to 'spread the love' to all areas of Auckland, not just the central city. I encourage decision-makers to recognise the untapped potential that exists north of the bridge. The North Shore has the appetite and track record to host successful, community-driven events that deliver real economic and social benefits. We are a major part of this 'super city' with more than 400,000 residents (bigger than Wellington) and need to get our fair share of funding and support from the council.

Solar Group in liquidation: Kiwibank among creditors owed more than $3 million
Solar Group in liquidation: Kiwibank among creditors owed more than $3 million

NZ Herald

time14-07-2025

  • Business
  • NZ Herald

Solar Group in liquidation: Kiwibank among creditors owed more than $3 million

The company, which provided installation and services of solar power, pool heating and hot water systems, has ceased trading and staff have been terminated. The first liquidator's report said Kiwibank holds a General Security Agreement – granting it security interest over the borrower's assets – and is owed $1.8m. Kiwibank had engaged Ruscoe and Keen to review the financial performance and viability of Solar Group in December last year, the report said. That review was extended in February to include the company's forecast performance and cash flow. Ruscoe and Keen said they were aware of nine potential employee claims. So far, they had received four employee claims totalling $102,336, including outstanding wages, commissions and holiday pay. Inland Revenue is owed approximately $933,675, with a significant portion expected to be preferential. There are also 118 unsecured creditors, which are owed $1,059,434. Creditors include ACC, Fuji Xerox, Meridian Energy, the Ministry for Primary Industries, NZ Couriers and Spark NZ. According to a statement of affairs, Solar Group has estimated assets of $2.5m, which is largely made up of intangible assets of $1.2m. The company has stock on hand with an estimated worth of $524,136. Ruscoe and Keen said it is unknown is any funds will be available to make payment to creditors. Solar Group is also a party in the disputes tribunal and district courts. Behind the ball Last year, Solar Group managing director Roeland Driessen told the Herald that solar uptake in New Zealand was slow compared to the rest of the world. 'The number of connections is about 3% solar,' Driessen said. 'In other countries like Australia, the United States, it's 30-40%. So we are way behind [the] ball.' Cost was one of the biggest issues. A solar system for the average New Zealand home comes with a price tag of about $25,000. In November last year, SolarZero was placed into voluntary liquidation owing more than $40m to over 700 creditors and staff. The company had 169 staff at the time of liquidation and about 15,000 customers. Cameron Smith is an Auckland-based business reporter with the Herald live news team. He joined the Herald in 2015 and has covered business and sports. He reports on topics such as retail, small business, the workplace, and macro-economics.

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