The Press THURSDAY, APRIL 15, 1976. Inflation of 20 per cent?

Press, Volume CXVI, Issue 34129, 15 April 1976, Page 12

The Press THURSDAY, APRIL 15, 1976. Inflation of 20 per cent?

For the first time, New Zealand is facing an annual rate of inflation of 20 per cent or more. Inflation at that level would make nonsense of personal financial planning and would cripple the activities of many businesses. The electors indicated last November that inflation was one of their principal concerns; the increase in the consumer price index of 4.4 per cent for the first quarter of 1976 demonstrates that inflation remains the most serious problem facing the country. The latest increase in consumer prices, reported in today’s issue of “ The Press ”, reflects increases in import costs late in 1975, and some of the increases caused by the removal of subsidies from basic items of consumer spending; the effects of other recent increases will not appear until the second quarter of the vear when the rate of inflation can be expected to be at least as high. Further drastic deflationary measures will be required if inflation is to be brought down to an acceptable level of something less than 10 per cent a year. Even so, this may take another 18 months or more to achieve.

When the worst economic trials for New Zealand are probably still ahead, cost increases which might be avoided cannot be permitted to flow on through the system to the disadvantage of the whole community. Instead of treating the increase in the consumer price index as a justification for higher wage increases in .July, employees’ organisations should realise that the figures indicate that stringent wage controls will be necessary if inflation is to be controlled without unacceptable unemployment. Most other sections of the community are having their standard of living reduced by rising prices and declining profits. Wage and salary earners cannot expect special favours before improved export receipts have assured the country of a general economic recovery.