Grant Robertson is right, 6.9% inflation spike isn’t Government’s fault, but it soon will be!

As TDB has been predicting, the second wave of Covid is the economic maelstrom it is creating and the inflation figures released to day see it surging to 30 year highs…

Cost of living soars: Annual inflation hits 6.9pc

Annual inflation has hit 6.9 per cent for the year to March 31, the largest movement since a 7.6 per cent annual increase in the year to the June 1990 quarter, StatsNZ said today.

The figure was lower than some economists had feared with forecasts of up to 7.4 per cent.

The New Zealand dollar fell by just over a quarter of a US cent to US67.86c in the minutes after the CPI’s release. Bond yields were unchanged.

The quarterly inflation rate was 1.8 per cent.

…Grant’s position is, ‘it wasn’t me’…

Grant Robertson doesn’t think New Zealanders blame him for inflation as CPI figures expected to rise further

Finance Minister Grant Robertson doesn’t think Kiwis blame him for inflation and instead believes New Zealanders understand that this is a “global phenomenon”.

As Shamubeel Eaqub points out, extra Government spending in the next budget can’t impact inflation now because the money hasn’t been spent yet, so Grant is right that much of our current spike in inflation is being driven offshore…

As the World Bank and the International Monetary Fund kick off their spring meetings this week, both are sounding a warning: The global economy, they say, is quickly losing steam.

What’s happening: The World Bank has slashed its forecast for global growth in 2022 to 3.2% from 4.1%, anticipating a sharp deceleration from estimated growth of 5.5% in 2021. The IMF’s latest outlook arrives later Tuesday.

World Bank President David Malpass told journalists that “severe overlapping crises” are weighing on the recovery.

“There’s Covid-19, inflation and Russia’s invasion of Ukraine,” he said on Monday.
Developing countries, many of which are facing high levels of debt and a plunge in the value of their currencies, as well as soaring food prices, are of particular concern, he added.

Breaking it down: Around the world, engines of growth are sputtering as prices rise and the war in Ukraine wreaks havoc on strained supply chains.

Europe, which relies heavily on Russia to meet its energy needs, is especially exposed. There, much could depend on Russian President Vladimir Putin’s next move. If supplies of Russian natural gas to Germany were suddenly cut off, Europe’s biggest economy would lose a shocking $238 billion in economic output over the next two years, the country’s forecasters have said.
In the United States, inflation has hit a level not seen in four decades. That’s forced the Federal Reserve to consider an aggressive pullback of its pandemic-era support for the economy, boosting fears that it could hike interest rates so much that it causes a recession.
And China saw retail sales plunge 3.5% in March from a year ago as tough lockdowns aimed at curbing the spread of Covid-19 weighed on activity in major hubs like Shanghai.
While Europe is the most vulnerable, Goldman Sachs this week put the odds of a US recession at 15% in the next 12 months and 35% within the next 24 months. Japan’s Nomura said Monday that the chances are rising that China falls into a recession this spring.

…however, the Governments decision to pump billions into the banks to fund property speculation has seen the wealthiest amongst us $1Trillion richer, and Grant is responsible for that…

Wealthy nearly $1 trillion richer since Covid began – Hickey

An economic and political commentator says since the Covid-19 pandemic reached Aotearoa, the rich have become richer and the poor have become poorer – in part due to the Government’s policies.

…if we can look after the rich, we have an obligation to the poor.

Here’s the reality, the inflation spike is not a transitory phase, it’s the new reality.

Look at China right now...

Nearly 400 million people across 45 cities in China are now under full or partial lockdown as part of China’s strict zero-Covid policy. Together they represent 40%, or $7.2 trillion, of annual gross domestic product for the world’s second-largest economy

…add the Ukrainian war and the instability to wheat and base line manufacturing in metals prices alongside the impact on developing economies

Smaller countries are also struggling. Many borrowed heavily over the past decade to deal with the effects of the 2008 financial crisis and the pandemic. Now, interest rates are starting to rise, just as the prices of essentials like food and fuel leap.

…and you have geopolitical shockwave after geopolitical shockwave hitting us and snapping neoliberal free market global supply chains.

Grant and Labour can be blamed for what’s happening now, but they will be blamed when things get worse by the end of the year because of the predictability of these black swans all landing at the same time.

This is why the Government must seize the possibility of fully funding universal services as a means to counter the cost of living crisis.

Free public transport, free lunch and breakfasts at school and breaking the Supermarket duopoly by setting up a new 30% player will do more to lower the cost of living than any tax cut.

Labour must have courage and vision to make fundamental bold policy changes that directly impact the pockets of renters and first time home buyers alike.

If they don’t they will get blamed come December.

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