Finance Minister Nicola Willis responds to inflation drop

Finance Minister Nicola Willis said there is still a lot of work to be done. Photo / Mark Mitchell

Finance Minister Nicola Willis says the latest drop in inflation shows the progress her party is making but admits there’s still a lot more work to do.

Yesterday, it was announced annual inflation fell in line with economists’ expectations to 4.7 per cent in the final three months of 2023.

This was a significant improvement from the September quarter when it sat at 5.6 per cent.

The Consumers Price Index (CPI) also rose by less than the Reserve Bank (RBNZ) anticipated in November, when it forecast inflation falling to 5 per cent in the December quarter.

Nonetheless, at 4.7 per cent, the rate remained out of the RBNZ’s 1 to 3 per cent target range.

Willis told Newstalk ZB this morning the drop shows the progress her party is making “in the fight against inflation.

“But there’s still more work to do and our government will be doing all it can to support the Reserve Bank and its fight to get inflation back under 3 per cent and get that cost of living crisis under control,” Willis said.

She said she is awaiting RBNZ chief economist Paul Conway’s speech next week “with interest.

“He may of course examine what risks they can see whether in fact the events in the Red Sea, for example, and the risks they pose to freight, whether they’ll be looking to see whether that has any inflation impact as well,” Willis said.

Finance Minister Nicola Willis said there is still a lot of work to be done. Photo / Mark Mitchell

Willis said the government still “has a few jobs to do” and is looking to reduce “red tape costs” for businesses.

“We’re also working really hard to get government spending disciplined again because there’s no use the reserve bank cranking the handbrake on the economy if the government has been pumping it with the spending accelerator,” Willis said.

Agencies across the board are being asked to tighten their belts and are on track to deliver savings to Kiwis, she said.

Savings will also come in the housing sector, Willis said, pointing at the repeal of the Resource Management Act before Christmas last year.

“We are proposing to make it much easier to both consent infrastructure which is needed to support new housing development and also to allow councils to go for housing growth,” Willis said.

“The second thing of course is that we will be moving to remove some of the costs that have been imposed on landlords and that have been passed on to tenants by gradually restoring interest deductibility for rental properties.”

Rachel Maher is an Auckland-based reporter who covers breaking news. She has worked for the Herald since 2022.