What’s driving inflation?
The breadth of inflationary cost increases in New Zealand has economists worried, while a new Australian report points to corporate profit, not wage growth, as the driver there.
Mōrena and welcome to The Bulletin for Tuesday, July 19, by Anna Rawhiti-Connell. Presented in partnership with Z Energy.
In today’s edition: a comparison of crime rates across the regions; demand for RATs and masks is up; anonymous employer reviews not so anonymous; but first, the drivers of inflation.
Inflation rate hits 32 year high Image: Getty/Archi Banal
Triple hike to official cash rate (OCR) could be on the cards
Well, Infometrics chief economist Brad Olsen was the only one to call it correctly. Inflation hit 7.3% yesterday which, as noted in yesterday’s Bulletin, is the rate Kiwibank chief economist Jarrod Kerr said would move markets and flow into retail interest rates. The rate is the highest it’s been in 32 years, so back around the time of the 1990 Commonwealth Games in Auckland, and this moment. I’ll point you to an updated version of a piece by Kiwbank’s Mary Jo Vergara – a brief history of inflation in New Zealand – for some actual economic context. ANZ and ASB economists say the Reserve Bank may hike the OCR by 75 basis points to 3.25% next month.
The spread of inflation and number of drivers will be biggest concern to Reserve Bank
Olsen said price rises for food, fuel and rent “lived up to expectations” but that it was the rise in the prices of locally-produced non-tradable goods and services (as opposed to “tradable” where prices are largely set overseas) that was the biggest concern. The increase was largely driven by rising rents and construction costs. The price of a new build house is up 18% on this time last year. The next largest contributor was transport costs. Petrol prices were up 32% in the year to the June 2022 quarter, the largest annual increase since the June 1985 quarter. Diesel prices increased 74% over the same period.
Australian report finds profit, not wages, driving inflation
Newsroom Pro’s Jono Milne has done some digging on fuel prices and found that as international crude oil prices have dropped, an unprecedented 60c in every litre of petrol or diesel is going to the fuel retailers. There was an interesting report out of the Australian Institute yesterday sent to me by a Bulletin reader (thank you, Brian). The report challenges the narrative in Australia that a “wage price spiral” is driving inflation. It’s a chunky read if you’re interested, but the topline finding is that rising corporate profits are a major factor in Australia’s escalating inflation. The Nobel prize-winning economist Joseph Stiglitz is in Australia at the moment and says a windfall profits tax is a “no-brainer”. First Union’s Edward Miller has looked at the data here, and while there is less data available, Treasury corporate tax data showed that in the year to March 2022, corporate profits in this country had spiked by 39%.
Rental accommodation supplement based on six-year old data
There are calls for the government to provide more help for those who are really struggling. The Salvation Army’s Ian Hutson told RNZ’s Checkpoint last night that the Ministry of Social Development's accommodation supplement payments are based on rent data that is about six years out of date. Median weekly rents have risen from $390 in July 2016 to $580 in April 2022. A survey of 4,500 students found that on average, students living in a shared flat are putting 54% of their income towards rent. Education minister Chris Hipkins responded to that by pointing out that student allowances had been increased 58.1% between 2017 and 2022, which compared to 3.6% between 2012 and 2017.
Business Is Boring, in proud partnership with Spark Lab:
Growing a business is hard in the first place, but when it’s one that falls under strict advertising rules and social stigmas, it’s surely even harder. Girls Get Off is a sex toy brand founded by Viv Conway and Jo Cummins in 2020 with a goal to empower wāhine in their sexual health. Viv Conway joined Simon Pound on Business is Boring to talk about what makes their brand better for women, and how they’ve found success in spite of taboos.
Listen to the podcast here.
Crunching the crime rate numbers
Last night I listened to another breaking news story about a shooting in Grey Lynn in Auckland. This morning, the Herald’s George Block has reported that gun crime in Auckland doubled in May. As Emma Vitz writes, there is a belief that Auckland has experienced the worst increase in crime since the pandemic began. Vitz is a regular number cruncher for us at The Spinoff and has had a look at crime data across New Zealand and found that yes, crime rates have risen in New Zealand since before the pandemic, but the increases in Waikato and Nelson are higher than in Auckland (just). The frequency of crime in Waikato increased by 20.5%, and in Nelson by 19.9%. In Auckland it’s 19.1%, against a national average of 15.4%.
Free RATs increase demand for testing
It seems the government's move to make rapid antigen tests (RATs) and masks free is driving greater demand for them. RNZ reporter Louise Ternouth spent some time at an Auckland testing centre yesterday and found that it was looking busier than it has in a while, with people eager to get their tests and free masks. One woman said it wasn’t really feasible for them to buy the tests but that they’d recently been to a gig and had come to pick some up. There is general consensus that the reported number of Covid cases each day is an undercount. Newsroom’s Marc Daalder reports that the Ministry of Health will launch a survey of random Covid testing to determine the true community prevalence of the virus in the "coming weeks".
New Zealand toy company wins bid to get details of former employees who left critical reviews
As David Farrier reports in his newsletter Webworm, billion-dollar New Zealand toy company Zuru has been successful in its bid to get Glassdoor to release the details of former employers who left critical reviews on the site about the company. Glassdoor is a website where people can leave anonymous reviews about what it’s like to work at a company. BusinessDesk’s Oliver Lewis (paywalled) is also reporting on the story this morning saying Zuru wants to sue the reviewers for defamation in New Zealand. The judgement from the US District Court of California states “Glassdoor hasn't convinced the Court that in New Zealand, the relevant jurisdiction, Glassdoor's interest in preserving anonymity would be prioritised over Zuru's interest in protecting its reputation.”
Click and collect
Small New Zealand town of Blackball on the West Coast hit by very big rate rise.
Ex-deputy mayor of Wellington to become Labour Party president.
73% of the pay gap for Pacific males and 61% of the pay gap for Pacific females can not be explained.
Playground planned for New Plymouth’s foreshore will be one of the largest in the Southern Hemisphere.
Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz
As part of Bleed Week, Siouxsie Wiles looks at what we know about Covid-19, vaccines and periods. Alex Casey talks to author Tessa Duder about introducing countless young New Zealand readers to periods through her popular Alex series of novels. Tara Ward talks to Masterchef NZ champion Sam Low about how food is his love language. Jonny Osborne considers whether making public transport free would be an expensive folly, or just the solution Tāmaki Makaurau needs.
Black Caps pick up T20 win in Ireland
The Black Caps have beaten Ireland this morning in the opening match of the T20 series in Belfast, with the NZ Herald writing “The shorter the format the better for the Black Caps”. As Stuff’s Brendon Egan reports, the series in Ireland marks the start of a busy T20 run for the Black Caps, leading into the World Cup in Australia in October. They play T20 series against Scotland, the Netherlands, and the West Indies before a tri-series in Christchurch in October against Pakistan and Bangladesh. Meanwhile, New Zealand-born England test captain Ben Stokes has announced he is retiring from one-day international cricket.
American Rasputin
Former advisor to Donald Trump, Steve Bannon, is facing trial in the US after refusing to testify in front of the committee investigating the January 2021 Capitol insurrection. Jury selection for the trial began yesterday. Bannon has recently decided to cooperate and testify but the trial goes on nonetheless. The Atlantic’s Jennifer Senior profiles Bannon, writing that he “is a powerful agent of chaos, keen to leave ‘a smouldering crater’ where our institutions once were.” His connection to New Zealand comes by way of Counterspin Media, a New Zealand-based talk show that was an instrumental voice in the protests at parliament this year. It streams on GTV, a network part-founded by Bannon. Counterspin Media recently tried to host an event in Dunedin but had its booking cancelled.
