Power crisis pulling back growth

The Reserve Bank predicts a rise in retail electricity prices of 4 per cent in both the September and December quarters.

But it admits that the estimate is just a stab in the dark.

It also expects the electricity crisis will shave around 0.2 per cent off economic growth this year compared with 0.6 per cent in the last dry year, 1992.

"That's a very rough estimate at this stage," governor Don Brash said yesterday. He told Parliament's finance and expenditure committee that a rise in electricity prices after a lack of rainfall in the catchments of the hydro lakes was the sort of shock that could be disregarded for monetary policy purposes.

Unless, that is, it raised in the inflation expectations that underpinned price-setting behaviour generally.

Feature: Electricity

Energy Efficiency and Conservation Authority