Great video sir. I still don’t understand how the inflation figure is dropping. Eggs and meat : almost double the prices pre covid. Fuel: highest is the last 5 years Public transport : highest fare prices atm Salaries haven’t grown at the same rate. What is bringing down inflation?
Thank you and it's a great question you ask. Inflation measures the overall rate at which prices are increasing or decreasing, not the changes in individual prices. While it's true that the prices of eggs, meat, fuel, and public transport have risen significantly, other goods and services have seen slower price increases or even decreases. This means we might not notice the prices dropping in areas like groceries and petrol. A significant factor in the decline in overall inflation is tradables inflation, which fell 1.6%. Additionally, the Reserve Bank's actions, such as raising interest rates, are aimed at reducing demand to curb inflation. This mix can lead to a lower overall inflation rate even though some items remain very expensive. The goal is to bring inflation down to the 1-2% range, which should eventually lead to more noticeable drops in prices for essentials like groceries and petrol. I hope this helps clarify things. We understand how the figures can seem misleading.
Inflation was coming down since 1 Jan to Mar 23 Qtr inflation dropped from 7.2% to 6.7% ( Labour policy/reserve bank) each qtr following this inflation has decreased 1 % or 0.5% to get ro 4% in March 24. This is the effect of Labour and the reserve bank.
Thanks for the great videos and the balanced insight into the nz property market.. its very rare! After in depth research at historic property bubble crashes in a number of different comparable countries it appears that the majority if not all price declines happen when the OCR rate is starting to drop as this obviously coincides with the economy being i the worst position. What leads you to believe that this time will be different? Thanks again
Hi there, we appreciate the comment. The RBNZ is currently balancing between controlling inflation and supporting economic growth. The current scenario includes high inflation, which might prevent significant OCR cuts at this stage. This is somewhat different from past crises where aggressive rate cuts were used primarily to combat economic contraction without the immediate inflation concerns. This is why we are seeing house prices come back, even with the OCR rate maintaining.
Printing money is not necessarily bad so long as the money is directed towards investments. Inflation is not always bad. Had the money been directed towards proper infrastructure investments that would have stimulated the economy is a good way. However, the Labour-Green coalition didn't do that. They shut down Marsden point and their ideological blinder inhibited investments in the energy and resources sectors leading to shortages and higher resource prices that affects the entire economy. Labour also raised fuel taxes and other consumption taxes and redirected that money to favour expensive EV vehicles that the middle class doesn't want or need. Had the money been directed to energy security and had Labour not turned into megalomaniacs keeping NZ unnecessarily locked down the country would not be in this mess.
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Always a privilege sitting down with you George, look forward to my Q&A going live next Wednesday.
You were right again, the property market started dropping again as you predicted a couple month ago.👍
Thanks for the continued support, we're hoping it's helping people prepare for what's to come.
Pure class. Thank you both for the insight
Our pleasure, thanks for the positive feedback
Great video sir.
I still don’t understand how the inflation figure is dropping.
Eggs and meat : almost double the prices pre covid.
Fuel: highest is the last 5 years
Public transport : highest fare prices atm
Salaries haven’t grown at the same rate. What is bringing down inflation?
Thank you and it's a great question you ask.
Inflation measures the overall rate at which prices are increasing or decreasing, not the changes in individual prices. While it's true that the prices of eggs, meat, fuel, and public transport have risen significantly, other goods and services have seen slower price increases or even decreases. This means we might not notice the prices dropping in areas like groceries and petrol.
A significant factor in the decline in overall inflation is tradables inflation, which fell 1.6%. Additionally, the Reserve Bank's actions, such as raising interest rates, are aimed at reducing demand to curb inflation. This mix can lead to a lower overall inflation rate even though some items remain very expensive.
The goal is to bring inflation down to the 1-2% range, which should eventually lead to more noticeable drops in prices for essentials like groceries and petrol.
I hope this helps clarify things. We understand how the figures can seem misleading.
Inflation was coming down since 1 Jan to Mar 23 Qtr inflation dropped from 7.2% to 6.7% ( Labour policy/reserve bank) each qtr following this inflation has decreased 1 % or 0.5% to get ro 4% in March 24. This is the effect of Labour and the reserve bank.
Thanks for the great videos and the balanced insight into the nz property market.. its very rare! After in depth research at historic property bubble crashes in a number of different comparable countries it appears that the majority if not all price declines happen when the OCR rate is starting to drop as this obviously coincides with the economy being i the worst position. What leads you to believe that this time will be different? Thanks again
Hi there, we appreciate the comment.
The RBNZ is currently balancing between controlling inflation and supporting economic growth. The current scenario includes high inflation, which might prevent significant OCR cuts at this stage.
This is somewhat different from past crises where aggressive rate cuts were used primarily to combat economic contraction without the immediate inflation concerns.
This is why we are seeing house prices come back, even with the OCR rate maintaining.
Printing money is not necessarily bad so long as the money is directed towards investments. Inflation is not always bad. Had the money been directed towards proper infrastructure investments that would have stimulated the economy is a good way. However, the Labour-Green coalition didn't do that. They shut down Marsden point and their ideological blinder inhibited investments in the energy and resources sectors leading to shortages and higher resource prices that affects the entire economy. Labour also raised fuel taxes and other consumption taxes and redirected that money to favour expensive EV vehicles that the middle class doesn't want or need. Had the money been directed to energy security and had Labour not turned into megalomaniacs keeping NZ unnecessarily locked down the country would not be in this mess.
Excellent points Chris!
The reserve bank is only focused on inflation now. Before they had think about people. They independent also. So they can wait to 1% CPI.
Wasteful spending = putting up all new signage of Maori names for things all over the country. What a waste.
Do Australia 😎
Hi Craig, we'll do one when we move to Australia 😉