Inflation jumps to a 12 month high
To embed this content on your own webpage, cut and paste the following:
See terms of use.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
20 minutes ago
- RNZ News
New Zealanders urged to break up with property
Photo: 123RF Is it time to consider selling your property investments and put the money into assets that actually grow the economy? One investment expert says New Zealand would be a lot better off if such a change were to occur. Jeremy Williamson, head of private wealth and markets at Craigs Investment Partners, said there was momentum building for a move away from a "love affair with property and property investing". "We think that's great for a number of reasons. New Zealand is always going to have an affinity with property investment but there are so any benefits for us as a country if we can turn the dial away from it, into more productive parts of the economy." He said property investment was not the most efficient way to help create a better life for the next generation of New Zealanders. "What does it do on a national scale for us if we're just buying and selling houses back to each other to create wealth? I don't necessarily believe for the collective it works." He said New Zealanders' knowledge about investing in other assets was growing. "If you put $100 into a New Zealand house 30 years ago it would be worth nearly $600. If you put it in New Zealand shares, it would be $1100." He said people had favoured property investment for the reassurance of being able to "touch and see" it, but that was changing. "There is a whole generation of people who got burnt in 1987 in the sharemarket crash. But the reality is that generation is starting to pass and there is a new generation of people coming through that have had a really positive experience in asset classes outside property." He said the ability to leverage a property investment - borrow money from the bank to buy a house with only a 30 percent deposit, for example - would also make it appealing. But he said if even 10 percent of the money being invested into property went into other assets, it would make a big difference. "We over-allocate to property, we're reinforcing inequality through investment in an asset class that isn't productive. We're inflating the asset class and putting it out of reach for the next generation. "If we were to set ourselves an objective, we want a more productive economy, more opportunities for our kids, all that stuff, if we're allocating capital into more productive asset classes the tax take from that downstream is going to increase anyway." He said there was also a conversation to be had about creating the right tax incentives to encourage that. "It's worth discussing at a national level. A house can't grow an economy. Investing in productive, growing companies can change the economy for the good." He said now could be a good time to realise property investments sand put the money into other asset classes. Infometrics chief forecaster Gareth Kiernan said the average residential property investment return over the 10 years to March 2025 was 9.5 percent a year, including rents and capital gains. Morningstar said the per annum return of a typical aggressive KiwiSaver fund over that period was 9.34 percent. "The worst 10-year stretch was the 10 years to June 2017 (8.7 percent per annum), and the best was the 10 years to December 2021 (14 percent per annum)." He said housing could be less central to investments in the future. "The house price falls in 2022/23 have demonstrated that house prices are not a sure bet to always go up. "Significant increases in insurance costs and local government rates mean that the operating expenses associated with rental property are much higher than in the past." He said KiwiSaver had also made people more familiar and comfortable with financial investments. "A lack of expectations about capital gains for housing is also likely to limit investor demand for property for some time yet. Poor housing affordability and low rental yields suggest limited room for house prices to be bid up significantly - and rising property values are a key component of property being an attractive investment." Rupert Carlyon, founder of Koura KiwiSaver, said he agreed that New Zealand needed to move away from property. "With the world moving into negative population growth in the next few years it will have massive implications on property prices. The dynamics for property don't look great over the next 10 to 15 years when you consider the potential for slowing to no population growth, falling real wages and higher interest rates driven by inflation." He said Bitcoin had been the asset class that had delivered the best performance of the past decade. It had given investors a 45,000 percent return. "However it is important to point out that during this period it went from being a small speculative asset class to gaining acceptance into the mainstream. That is evidenced by the launch of the ETFs the inclusion by governments of Bitcoin in their reserves. "While it is highly unlikely that we see this type of growth again - it is important to point out that Bitcoin is still a small asset class compared to others. With a market cap of US$2.4tr it is only 10 percent of the value of gold, just over 50 percent of the market cap of Nvidia and tiny compared to the value of the real estate market. If adoption continues we expect to see some of these gaps close. "Though while less risky than it was a few years ago, risk still exists. It is important that investors remain diversified and don't place all their bets on any single asset or asset class because history shows assets will always move in cycles." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
an hour ago
- RNZ News
Government's cost of living speech 'more spin than a front load washing machine'
Finance Minister Nicola Willis and Prime Minister Christopher Luxon. Photo: RNZ / Samuel Rillstone The Labour Party says a cost of living "sermon" by National Party Ministers reeks of desperation and spin. The government is on the defensive over its efforts to mitigate the cost of living, even as it announces fresh measures to save voters cash. On Monday, the coalition promised to legislate a ban on surcharges for contactless card payments from no later than May 2026. The Commerce Commission estimates New Zealanders are paying up to $150 million in surcharges each year - including $45 to $65 million in what it considers excessive charges. Prime Minister Christopher Luxon said it was a worthwhile policy but the "most important" thing the coalition could do was to "double down" on its long term economic plan. The government spent the first 10 minutes of yesterday's post-Cabinet media briefing outlining actions it had already taken in this plan: tax relief in last year's budget, cutting government spending and scrapping plans to increase petrol taxes to name a few. Finance Minister Nicola Willis stressed these steps did not mean everything was fixed but said the coalition had managed to get the country "back on course" since getting into office. "We know many people are still doing it tough and the economy is recovering from a protracted downturn. However, we know that the fundamental changes we are making will deliver," she said. "Economies are like oil tankers. You can't turn them around on a dime, but New Zealand is back on course." [h ] 'Out of touch' - Hipkins The latest Ipsos Issues Monitor survey saw Labour overtake National as the party New Zealanders consider most able to handle the cost of living . This was despite the Labour Party releasing no substantial new policy since the election. Labour Party leader Chris Hipkins. Photo: RNZ / Mark Papalii Opposition leader Chris Hipkins was quick to criticise the government's briefing, saying no amount of spin could convince the public they were better off. "According to the sermon that we just heard from Nicola Willis and Christopher Luxon, New Zealanders just don't understand the genius of their plan. "Things are supposedly getting better, according to them. I think it shows just how out of touch they are with the reality facing the vast majority of New Zealanders." Hipkins said there were now 18,000 fewer people working in construction, more people heading over to Australia and higher unemployment rates compared to the last election day. "No amount of spin from them is going to change the reality that things are getting worse for New Zealanders under their leadership. "I think we should start calling them Fisher and Paykel, because they've got more spin than a front load washing machine." Hipkins took aim at the government's move to hike director fees for the 22 Crown-owned entities; in some cases by up to 80 percent. "Increasing the pay of some of the best paid New Zealanders at a time when the majority of Kiwi families are struggling just to make ends meet shows just how out of touch they are." Luxon said public sector director fees had gotten "completely out of whack" compared to private sector fees and the government needed to be able to attract good people into public roles. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
2 hours ago
- RNZ News
High butter prices is actually a good thing for New Zealand, economists say
File photo. Photo: Margaret Jaszowska for Unsplash Butter prices might be biting at the supermarket checkout, but there's a warning that anyone hoping they'll fall should be careful what they wish for. The price of butter has increased about 50 percent over the past year, pushed up by high global dairy prices. But economists say that's actually a good thing for New Zealand. Household Economic Survey data shows that in 2023, households spent about $124 million on butter. Between 15 percent and 30 percent of households would buy butter over a one- or two-week period. But the country exported $5.2 billion worth. "It's not nearly worth trying to change the domestic butter game at the expense of our very lucrative export potential," Brad Olsen, chief executive at Infometrics said. "Being in China at the moment, I've been looking around here ... we are still charging more in our premium export markets than we are seeing domestically. "I mean in New Zealand, butter is $8.50 to $11 depending on who you're talking to or what shop you're going to. I've found an Anchor block in China that was only 454 grams for about $13.52. So the export stuff works for us." India is also a large producer of butter and has comparatively low prices, but Olsen said that was not comparable because farmers there were getting a subsidy of up to a third. In Australia, there was no GST on fresh food. Butter is about 7 percent of total New Zealand exports. "So yes, consumers get hit with higher butter prices in New Zealand," Olsen said. "But we make a lot more as a country from the exports that we send out overseas. And I guess you know, cause there's all this talk of, well, what happens if butter prices were lower ... I do think that there is this conception that if magically butter prices were lower, everything else would be the same too. "And that's just a complete false economy. If you had persistently lower butter prices, then there wouldn't be quite as many people farming. Or they wouldn't be the same profits from manufacturing and similar from Fonterra and what have you. That would mean there would be less money going into the economy across the country, people would have fewer jobs than they would at the moment. And so you might be paying cheaper, better prices. But you might not have a job. "That's the trade off that, that to a degree we're talking about ... I also think we talk a lot about butter. How much butter does every household in New Zealand consume? Like how many blocks are you guys buying?" Westpac chief economist Kelly Eckhold said it was good for the country overall that dairy prices were high. "Exports of cheese is $3 billion. All these dairy products are rising for the same underlying reason - demand for milk fats is increasing. Butter and cheese in particular are the things the world wants." He said the conversation was influenced by the fact that everyone encountered the retail price but not everyone was exposed to the export earnings. "One thing to think about is the gains from the income are more narrowly shared than the costs that come to all of us. We all go to the supermarket and buy a bit of butter and cheese and milk. "But if I look at employment trends on a regional basis, you can see in the last few months the regions where jobs are growing are Canterbury, Otago, Southland, West Coast, Marlborough ... these are areas that have a much higher agricultural and dairy input. There are more jobs in those parts of the country whereas Wellington and Auckland are very weak. There aren't many dairy farms in Remuera unfortunately." He said a wider problem was not that dairy products' price was rising but that New Zealand incomes were not keeping up. "Prices are being bid up by people overseas who are wealthier than us and their incomes are growing more strongly. "That's why they can afford to pay the prices that are pushing the prices up. The question isn't should we be redistributing further the profits form those sector. The question should be what can we do to improve the incomes of Kiwis so when demand goes up overseas we can keep pace. If we can do something that gets job growth up that's unequivocally better than putting price controls on butter or cheese." Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
