Legal and regulatory update for the life and health insurance sector
Legal and regulatory review for the life and health insurance sector

Bernard Aw describes inflationary pressures on NZ, possible impact on businesses, and other news

Bernard Aw, economist for Asia-Pacific at Coface, has described intensifying inflationary pressures on NZ, warning that too strong an inflation rate has the potential to dampen economic activity.

The consumer price index hit 6.9% in the first quarter of 2022, the highest in over 30 years, lifted by double-digit growth rates in costs of housing and transport, as well as strong increases in household utilities and food. Core inflation rates quickened as well, due to demand pressures acting on limited resources, worsened by supply constraints.

The strong rise in consumer prices is expected to erode households’ purchasing power, and therefore constrain private consumption….. Consumers remained pessimistic about the economy in April after confidence fell to a record low in March, according to the ANZ-Roy Morgan Consumer Confidence index.

…..reduced profitability could push businesses to delay investment plans and cut back on output.

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