Tracking the dragon

Quarterly inflation reporting puts New Zealand policymakers and businesses at a disadvantage, writes RICK JONES.

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It's hard to think of a government statistic that has a more direct impact on the lives of everyday New Zealanders than the consumers price index (CPI).

With official inflation at 7.3%, consumers, wage and salary earners, superannuitants, businesses and homebuyers need to know the direction of inflation and interest rates so they can manage their expenditure and plan ahead.

And, of course, it's one of the key influences on the Reserve Bank of New Zealand's monetary policy decisions.

As RBNZ governor Adrian Orr put it recently, "inflation is no one's friend and causes economic cost". To fight inflation, the bank has hiked its official cash rate, which sets market interest rates, from 0.25% to 3.0% in just 10 months.

Most economists believe price rises have peaked. But they also predict the RBNZ will continue to hike rates into next year, to get inflation back into its 1-3% target band.