What is happening with NZ inflation

Walking down the street everyone is abuzz with the recent CPI numbers. 5.9% inflation! Someone’s failed! Economists are wrong for some reason! Freeze prices! Slash things! Destroy capitalists! Suppress workers! Random noises!

I’ve heard it all.

However, it made me realise something. I haven’t looked at the details of the CPI numbers for years. If the situation has changed then my inattention to these numbers may lead to me making silly decisions. Furthermore, other people’s attention to these numbers may make inflation more responsive to the CPI releases – meaning that there is more value in me paying attention.

Given all of this, and given that I wanted to reacquaint myself with the new version of the Stats NZ website, I’ve put together an excessively long video exploring the CPI data at the “product class” level. In it I also have a look at some price stickiness measures, looks at some other inflation numbers, and fail to put particularly nice labels on scatterplots – this can be found here.

If you prefer 4 minute summary videos instead, then I run through the key ideas in 3 graphs here. And if you prefer to get your own hands dirty with the data, rather than listening to me drone one, jump over here to use my R code and access Stats NZ’s data.

Do I reach any exciting policy conclusions, or give a forecast of where we are going in any of this – no. Did I have fun, and feel like I have a better understanding of the type of shock New Zealand is experiencing at the moment – yes.

By the way, the three images I chat about are below – in case you’d rather just look at them rather than hear me drone on (fair). Data source is Stats NZ.

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  1. […] I chatted about monetary policy in New Zealand. As we’ve noted in the past, measures of price growth are pretty elevated in New Zealand – however, I make the case that RBNZ actions have been relatively appropriate (given […]

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