From October 2011 to October this year, food prices have risen 0.3 percent. This is the first rise in food prices since April this year. The main driver behind this rise was increased fruit and vegetable prices. However, with the summer months approaching, we would expect fruit and vegetable prices to ease over the next few months. The first indication of this has been the decrease of 0.6 percent in food prices from September to October.
CONSTRUCTION ACTIVITY continues to fuel activity across the economy. Further, with the dairy sector boom having come to a grinding full stop as international prices plummet, the construction sector is now pretty much on its own as the engine of the country’s economic growth.
The October trade deficit declined from $775 million in the previous month to $718 million in October 2012, but remains well above the $226 million deficit in the same month in the previous year. The annual deficit has ballooned to $1.37 billion, from a deficit of $874 million a year ago.
The latest food price data release confirms the ongoing decline in food prices. November data shows food prices have been below year-earlier levels for six out of the last seven months, with October being the only exception. From October to November food prices fell by 0.8 percent, being the third consecutive month of month-on-month declines in food prices.
On 12th December 2012 the US Federal Reserve announced, for the first time, its explicit stimulus thresholds. The Federal Reserve announced that it will hold official rates at 0.25 percent for as long as the US unemployment rate was above 6.5 percent, and that inflation two years out is no more than 0.5 percent above the Federal Reserve 2 percent long-run goal.
With Christmas season and summer holidays just around the corner, consumers are starting to loosen their grip on their wallets.
Treasury lowered its forecast 2014-15 surplus to $66 million (on the Total Crown OBEGAL measure), but is still holding out for a surplus.
I often wonder why there is not a much louder call from the populace for an apology from economists given the mess that is the global economic system. Curiously, some economists still wield significant influence in the corridors and power – influence that also continues to be possessed by institutions that were close to the centre of the latest debacle.
New Zealand’s current account remains in red, with annual deficit increasing to $9.9 billion from $8.8 billion in the same quarter last year. The annual deficit is 4.8% of GDP, this compares with the 3.3% and 4.4% of GDP recorded in the same quarter in 2010 and 2011.