TALKING POINT Savers lose ground as prices climb nearly 5%

• Published date: 04 December 2021
• Publication title: Hawkes Bay Today

Concerning, too, is worldwide inflation. The United States figure is 6.2 per cent, and the International Monetary Fund puts global consumer price increases at 4.3 per cent, the highest level since 2011.

Apart from when GST changed, New Zealand’s figure is well ahead of anything experienced since 1987.

The global economy, technological advances and cheaper goods from Asia have suppressed inflation. The Reserve Bank has been more concerned to push inflation up to the 1 per cent to 3 per cent range than cut it back.

Deflation is a curse. A downward spiral compounds as consumers hold off buying because prices will fall. Fewer purchases and less economic activity then suppress the economy further.

Inflation, once it takes hold, does the opposite. Price-rise expectations feed on themselves. Buy now because next week the sofa will be cheaper. The...