You know the saying… never wake a sleeping dragon? Well it appears that we have - and the sleeping inflation dragon is well and truly awake.
Later this week; we’ll get to see the latest update on the country’s financial data – and it’s expected to show inflation in 2021 ran at its highest level in over 30 years.
The Consumers Price Index is expected to rise by 1.3 percent for the December quarter, coupled with inflation that accelerated to 6.0 percent.
The highest inflation in more than 30 years? Many of us have never experienced this kind of leap in the cost of everything.
The only way to appease this waking inflation dragon would be for The Reserve Bank to take some pretty hefty and aggressive action. But will they?
Some economists have said that the country is in the midst of "a perfect storm" of inflation pressures, but that much of the CPI's increase will be a result of offshore factors.
It’s a huge concern just how dependent we are as a nation on the fluctuations of the vagaries of the overseas markets. But that’s the bed we’ve been making so well over the past three or four decades.
The Consumer Price Index is something we all need to keep an eye on. After peaking at close to 6.3 per cent in early this year, annual CPI inflation is then expected to cool, but remain above the 1 to 3 percent inflation target until late 2023.
The real message here is that none of us want to be caught with our shorts round our ankles and financial institutions – once keen to lend you whatever you wanted – will be the first to disown you faster than a flock of Facebook friends.
The writing is on the wall – and that wall is a very real roadblock to the future plans of many good, hard working New Zealanders… both the employers and the employees.
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