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President’s Message - Inflation Rising



When I moved from Australia to Argentina in 2009 I moved from a prosperous country with a high-wage economy and good economic management to a resource-rich but low-wage country with a wide gap between rich and poor and one that has known more financial crises than I’ve had hot dinners. Economies are like waves and go through cycles with peaks (booms) and troughs (recessions). In Argentina a trough or recession usually means hardship and extreme hardship for the middle and lower classes respectively. In Australia the cycles are nowhere near as deep.

Argentina has had a problem with inflation for most of the past century. Nothing like Hungary in 1946 where inflation reached a staggering 4.19 quintillion % or the Weimar Republic where at one point one dollar was worth 1 trillion Marks. The excesses of populist governments in Argentina has led to somewhat lower hyperinflation. For instance in 1985 annual inflation reached 1,200%.

During the decade I lived in Argentina inflation was in the 20-30% range. Today it is in the 50-60% range. It was not a simple environment in which to run my research program and not an easy place in which to live day-to-day. You couldn’t go to a supermarket on two consecutive weeks and find the prices the same. As inflation increased month-to-month, public sector salaries also increased, but never by as much as inflation. So every month you fell a little bit more behind. Somehow you managed to cope.

Today in NZ we are feeling the pinch even when inflation reaches 7%. Many folk express their concerns regarding increasing food costs and especially those living on a government pensions. Yes, pensions have recently increased but I doubt they will increase as much as inflation. The trajectory at the moment doesn’t look great folks.

New Zealand Food Inflation Over Time

Food prices in New Zealand increased 7.6% year-on-year in March 2022, accelerating from a 6.8% gain in the previous month and rising at its fastest pace since July 2011. Food price increased in all categories including: fruit and vegetable (18%), meat, poultry & fish (8.7%), grocery food (6.7%), restaurant meals & ready-to-eat food (5.1%) and non-alcoholic beverage (2.7%). “Average prices for vegetables like tomatoes, broccoli, iceberg lettuce, and cabbage were notably higher than they were in March 2020 and 2021,” consumer prices manager Katrina Dewbery said. “There were also higher prices for dairy products like two-liter bottles of standard milk and one-kilo blocks of mild cheese.” These increases were partly offset by decreasing prices for avocados, boxed chocolates, and bacon. source: Statistics New Zealand

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NZ Food inflation 2021-2022.png
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