Memo to deflation deniers

Wednesday February 24, 2016 Dr Ganesh Nana

To those inflation hawks that believe inflation continues to lurk in the dark shadows, please peruse the following charts noting in particular …

  • NZ CPI inflation has been below 2% per annum for 4 years, and below 1% per annum for 9 of the last 17 quarters.
  • Core retail (i.e. excl. vehicles and fuel) price inflation has been negative for 10 of the last 17 quarters.
  • Producer price inflation has been negative for the last 6 consecutive quarters.
  • Global inflation pressures remain distinctly absent, with headline CPI in
    • United States
    • Europe
    • United Kingdom
    • Canada
    • Australia
    • Japan
    • China

all under 2% per annum.


  • Even headline average global CPI, as measured by IFS, is now below the 3% per annum mark.
  • Exceptions are present, but even India, South Africa and Indonesia appear to be now in the regular single-digit annual inflation world. Russia and Brazil are concerning outliers.
  • Global commodity, food, and oil prices have all slumped over the past couple of years.
  • Deflation denial may be of more concern than inflation … and may harbour unwelcome consequences.


Selected NZ inflation indicators

gi 1


Selected CPI inflation indicators around the globe


gi 2

gi 3



Selected world price indicators


gi 4