Tough times are ahead | Josie Pagani



Tough times are ahead

The last time inflation was this high, it was closer in time to The Beatles’ first hit than to today. For younger readers, The Beatles were a popular band in the 1960s. Inflation was a less popular soundtrack to the 1970s and 80s. But, like an ageing rock star doing one more world tour with greying hair and a dwindling fan base, inflation is back and playing near you.

$10 blocks of butter and eye-watering visits to the petrol station are just the start. The Economist predicts chaos. “All around the world, inflation is crushing living standards, stoking fury and fostering turmoil.”

Sovereign debt all over the world is part-owned by ordinary retirement savings accounts. Your Kiwisaver has had a bad year. Worse may come. In New Zealand, prices will keep rising. Interest rates will continue to rise. Household budgets will be further stretched and business investment will slow. Even if we enter a recession, energy prices will remain high into next year.

Josie's DominionPost column offers some advice about the policies needed to respond.

Get Email Updates