Macro Picture

Inflation weakens – OCR to stay low for longer

Thursday July 20, 2017 Mark Cox
21 07 graph 3

At the beginning of this year it was widely expected that, having spent five years below the Reserve Bank’s 2% target rate, inflation would start to increase. And, lo and behold, it did. In the March 2017 quarter, the annual rate of increase in the CPI reached 2.2%.

GDP and external accounts data confirm export sector in strife

Monday June 26, 2017
graph gdp 01

The good news from the GDP data for the March 2017 quarter was of continued growth, with expansion of 3.1% for the year confirmed.  However, the good news hid the rather sobering news of the export sector contracting for the third consecutive quarter.  Consequently, exports for the March year reportedly grew by a meagre 1.2%, as meat, textiles, and metal and machinery products all slumped with sizable negative growth recorded.

Inflation

Tuesday May 30, 2017 Konrad Hurren

Taking the definition of inflation as an increase in the price level of goods and services that the Reserve Bank of New Zealand (RBNZ) uses. And combined with the Policy Targets Agreement (PTA) which specifies that this measure should remain at 2% on average we could be forgiven for thinking inflation is a non-issue right now.

Budget 2016 - More of the same

Thursday May 26, 2016

As we suggested earlier in the month, the Budget has bent over backwards to signal that all is well with the economy and, consequently, the government’s books. Further, the initiatives and new programs do their best to indicate there are new measures to tackle the pressing issues of the day.

Budget watch in world facing a ‘fragile conjuncture’ of risks

Thursday May 05, 2016 Dr Ganesh Nana

This year’s Budget has all the hallmarks of one ‘treading water’. There will be strenuous efforts expended to make it look like something is being done; but, without the will to wish to do anything. With the accounts showing a borderline surplus (or deficit), the chances of any significant tax relief will remain on the backburner.

Stark downgrade of forecast economic outlook by RB

Thursday September 10, 2015 Dr Ganesh Nana

The widely expected OCR cut was not the most significant aspect of September’s Reserve Bank Monetary Policy Statement. The far more significant aspect was the somewhat jaw-dropping downgrade in the economic forecast picture that the Reserve Bank now paints.

New Zealand dollar hits record high against Australian

Friday April 10, 2015 Hugh Dixon

The New Zealand dollar hit A98.47c on the 31st March, setting a new record high against the Australian dollar and getting ever closer to reaching parity with the Australian dollar.  The New Zealand dollar has been increasing in strength against the Australian dollar over the last five months after hitting a low of A88.80c in early November 2014.

Again, No change to the Official Cash Rate

Friday March 13, 2015 Masrur Alam Khan

The Reserve Bank has kept the Official Cash Rate (OCR) unchanged at 3.5 percent during its last OCR announcement (12 March) despite forecasts indicating that CPI inflation will fall to zero for the March 2015 quarter. 

Consumers Price Index (CPI): Changing with the times

Thursday November 06, 2014 Hugh Dixon

Statistics New Zealand (Statistics NZ) recently announced the results of its 2014 review of the Consumers Price Index (CPI). Statistics NZ undertakes a review of the CPI every three years in order to ensure that the CPI basket of goods and services accurately reflects the main items and services New Zealanders buy. This way Statistics NZ can accurately calculate price changes each quarter.

Building momentum, or steady-as-she-goes? Budget 2013

Thursday May 16, 2013 Fiona Stokes

Modest, targeted spending increases sit behind Budget 2013. The Minister of Finance, Hon Bill English, indicated that the Government will return to surplus by 2014/15. Hailed as a budget that was building momentum, Budget 2013 indicates a slow and cautious approach whereby no money will be set aside for capital spending over this and the following three Budgets, and any new capital spending will come from the existing balance sheet.

Rebalancing NZ’s macroeconomy

Tuesday May 14, 2013 Dr Ganesh Nana

This note assesses whether progress has been made towards rebalancing the underlying structure of New Zealand’s macroeconomy. We explore five influences driving New Zealand’s macroeconomic imbalances – tradable sector activity, the burden of inflation control, net external trade receipts, expenditure in the domestic sector, and the direction of finance.

Food prices decline in September

Tuesday October 16, 2012 Kelly Dustow

Food prices eased in September, down by 0.9 percent on the previous month and 0.3 percent on the same month last year. This is consistent with international prices, which are down 4.1 percent on the year. Prices are expected to recover along with the global economy, but also because of unfavourable growing conditions in India, Europe and the US.

The government opens its books for 2011/12

Thursday October 11, 2012 Dr Adrian Slack

As we expected, the risks identified in the Treasury’s July Monthly Economic Indicators squeezed the positives according to the Government’s just released annual accounts for 2011/12. Initially, the latest annual government accounts looked like some positive reading: Core Crown revenue was up 5 percent, and expenses down by 2 percent on their 2011 levels. But in dollar terms, as revenue was only $60.6 billion while expenses were $69.1 billion, the Government ran a deficit.

August food prices flat on previous month

Monday September 17, 2012 Kelly Dustow

Food prices increased marginally in August – by 0.1% according to Statistics New Zealand’s latest release of its food price index. The most significant increase came from fruit and vegetable prices, which were 1.5% up in August. Prices for fruit and vegetables tend to rise in winter months and have been rising month on month since April.

Credit where credit is due

Wednesday August 08, 2012 Dr Adrian Slack

Treasury’s latest Monthly Economic Indicators conclude that the “domestic economy is looking in relatively good shape”, while acknowledging that “the global outlook worsened further in July, with downside risks increasing”. It sees “a pick up in coming quarters” that will see inflation accelerate and spare capacity be absorbed (by growth).

New Zealand growth still sluggish

Monday July 16, 2012 Dr Amapola Generosa

GDP grew 1.1% in the three months to March 2012, taking annual growth to 2.4%. The figure was a positive surprise, incorporating conservative growth in primary and manufacturing industries and nearly flat domestic spending.  Looking at the detail however, the quarterly figure was helped by a large increase in the statistical discrepancy.  Without this contribution growthbin the March quarter would have been a more modest 0.6%.

Back to Black

Friday May 25, 2012 Adrian Slack

First, returning the government’s books to surplus by 2014/15 despite an increasing austere global environment is achieved through a forecast surplus of $197 million in that year. This is $1.1 billion lower than last year’s Budget forecast for that year. Thereafter, the fiscal surplus is set to grow further to reach $2.1 billion in 2015/16.

Government revenue down, but deficit not as bad

Friday May 11, 2012

Treasury has released the final set of fiscal accounts before the release of the Budget in about a fortnight. The media release, however, is slightly misleading, as it does not always clearly distinguish when it is referring to Core Crown versus Total Crown figures. So while the government deficit is still bad, the actual figures are perhaps not as bad as one might interpret from a scan of Treasury’s media release.

Tax revenue up, but not by as much as Treasury would like

Thursday May 03, 2012 Dr Adrian Slack

Treasury regularly publishes data on the monthly tax take – the tax “outturn” data. These publications are usually released about six weeks after the end of the month. It is some of the earliest data available on how the economy is tracking. The data are reported for both “receipts” (cash that has been received by the collecting agency) and “revenue” (tax that is due, but which may not have actually been paid yet). The latter is an accrual measure, and is the most useful for gauging activity.

Food prices decline

Tuesday April 17, 2012 Kelly Dustow

According to Statistics New Zealand’s latest food price index, overall food prices in March were down 1 percent compared to February. In addition, prices were down for all five broad categories: fruit and vegetables, meat, poultry and fish, grocery food, restaurant and ready-to-eats, and non-alcoholic beverages.

Prices of capital goods are on the up

Monday February 27, 2012 Jason Leung-Wai

The Capital Goods Price Index rose 0.4 percent in the December 2011 quarter, taking the annual increase to 1.1 percent. This slight upward trend follows a very subdued period where the index remains at the same level as the June 2009 quarter.

Pricey Pumpkin Soup

Monday February 20, 2012 Jason Leung-Wai

Overall, food prices in January 2012 didn’t change from December 2011. For the year however, food prices were up by one percent.