N.Z. inflation falls to single figure

Press, 11 July 1983, Page 2

N.Z. inflation falls to single figure

PA Wellington Annual inflation as measured by the consumer price index fell to 8.3 per cent in June, figures released by the Government Statistician show. This compares with an annual inflation rate of 12.6 per cent in March and 15.3 per cent in December, 1982. The Government welcomed the figures. The Minister of Trade and Industry, Mr Templeton, said inflation was down to single figures for the first time in a decade.

It would be hailed by all New Zealanders who believed the Government was right in making a campaign against inflation its number one priority, the Minister said.

The 1 per cent increase in the June quarter followed the minimal 0.8 per cent increase in the March quarter, he said. “Where inflation this time last year was moving at an annual rate of 17 per cent, and rising, we have got it down to single digit figures for the first time for more than a decade.

“What is more, the annual rate for the June year is likely to fall even further in the second half of this calendar year.” Mr Templeton said houswives would appreciate that for the year ended June the increase of 1.9 per cent in food prices is now well below that of Australia. “I believe this gives our exporters a competitive advantage they will appreciate.”

The Leader of the Opposition, Mr Lange, said the United States’ rate of inflation had fallen to 3.9 per cent, Britain’s to 3.7 per cent, West Germany’s to 2.4 per cent, and Japan’s to 2 per cent.

“These rates have been achieved without a freeze,” he said. New Zealand’s main trading partners had dealt with the real causes of inflation — massive sustained public sector deficits and money supply growth, he said. “Comparing this country’s inflation rate with that of our major partners is the only real test of inflation. Because New Zealand’s inflation rate is out of line with our major trading partners our exporters and

producers of import-substi-tutes are continuing to lose competitiveness.

“No wonder our balance of payments deficit remains heavily in deficit.”

Social Credit’s finance spokesman, Mr Les Hunter, said the symptoms of inflation had been suppressed “only at the expense of enormous unemployment and falling living standards. “There are still no signs that when the freeze is lifted there will be any real policy in place to prevent inflation going right back up again,” he said. “If anything, it may even reach greater heights as a result of Mr Muldoon’s likely election year splurge.” The level of prices for the June quarter was 1.0 per cent above the March quarter figure. This follows increases of 3.6, 2.7 and 0.8 per cent for the September, 1982, December, 1982, and March, 1983 quarters. The food price index for June increased by 0.5 per cent from May. Fruit and vegetables contributed 42.4 per cent of the rise while meat, fish and poultry contributed 55.8 per cent.

Individual items which had the greatest effect on the 1.0 per cent C.P.I. quarterly increase were beef and veal, the purchase of previously occupied houses, home mortgage rates, overseas airfares, new and used car purchases and car insurance.

Electrical household appliances and draught beer had a decreasing effect. The figures show that in the year to June home ownership costs rose 17.8 per cent, tobacco and alcohol 14.4 per cent, and public transport 10.9 per cent.

A Federation of Labour economist, Mr Alf Kirk, said the slowdown in inflation was not unexpected given the extension of the wage and price freeze.

Inflation had been reduced, but at a cost, Mr Kirk said. The chairman of the Combined State Unions, Mr Ron Burgess, said there could not be many cost increases to feed through into higher prices with import prices flattening out and no wage increases for nearly two years.