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Speaker 1: We have Jared Kerr on the lane and he is

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Speaker 1: Kiwibanks chief Economist. Welcome to the program, Jared, and happy

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Speaker 1: new year.

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Speaker 2: Happy new year, and it's.

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Speaker 1: Time to look at this year and to look at

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Speaker 1: the economy and look at the back. I've been dreading

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Speaker 1: this slightly for a little while now because I've had

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Speaker 1: such a happy time over Somemon with my holiday, but

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Speaker 1: there we go. So the latest one is the inflation data,

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Speaker 1: which for the December quarter is out on Wednesday. We

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Speaker 1: have a dollar that's tanking, in petrol that's going up,

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Speaker 1: and all sorts of things. So what do you think

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Speaker 1: is going to look like, Well, we.

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Speaker 2: Think it's going to be quite good. Actually, the annual

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Speaker 2: rate's going to fall to about two point one percent,

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Speaker 2: which from the Reserve banks perspective, you know, that's job done.

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Speaker 2: There's a few things happening beneath the surface there. We're

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Speaker 2: seeing like petrol. Petrol prices are actually down, a lot

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Speaker 2: of imported goods are down in price, which is nice.

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Speaker 2: And it's just the homegrown inflation that's still a little sticky,

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Speaker 2: but it looks to be heading in the right direction.

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Speaker 1: You talk about that homegrown that's that's the that's a

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Speaker 1: non tradable, right, that's the stuff like, well, we've got

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Speaker 1: their rates and rents and electricity charges and supermarket charges

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Speaker 1: and all sorts of things, and that's a never ending,

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Speaker 1: you know, saga of increasing costs and increasing prices. Don't

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Speaker 1: we have more control over that than than the tradable inflation,

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Speaker 1: which is overseas based.

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Speaker 2: Yeah, exactly right. So the Reserve Bank does target, you know,

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Speaker 2: with a with an eye on domestic inflation because that's

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Speaker 2: what they can control. It has fallen quite sharply over

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Speaker 2: the last couple of years. It's got a little bit

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Speaker 2: further to go. Like you say, there's some frustrating stuff

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Speaker 2: in there, like rates, council rates, insurance costs. There's a

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Speaker 2: few things in there that are quite that are running

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Speaker 2: at quite a high rate. That will start to ease

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Speaker 2: off this year.

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Speaker 1: But last time we measured that was a five percent.

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Speaker 1: That's that's the inflation rate from.

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Speaker 2: Hell, well's in the falls now, and we expect it

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Speaker 2: to come to come down to about three percent this year,

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Speaker 2: which is in line with its longer run average. So

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Speaker 2: we have had a really strong bout of inflation. But

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Speaker 2: the good news is that we're on top of it

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Speaker 2: and it's getting back to longer term averages.

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Speaker 1: Very good. Meanwhile, as I mentioned before, the New Zealand

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Speaker 1: dial is looking terrible. What do you make of that.

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Speaker 2: It's a double edged sword. So on the one hand,

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Speaker 2: it's really useful in making New Zealand attractive. New Zealand

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Speaker 2: goes on sale when the currency falls, makes our goods

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Speaker 2: and services and travel cheaper to foreigners, So you know,

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Speaker 2: that's nice. We need more tourists here and our farmers

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Speaker 2: could always do with a few extra dollars in pay.

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Speaker 2: The other side is one of chevi frustration, where it

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Speaker 2: costs US more to buy foreign goods, it costs us

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Speaker 2: more to travel overseas. So the falling dollar, you know,

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Speaker 2: good on one hand, bad on the other. I'm an economist,

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Speaker 2: you know, I stay down the middle. It is. It

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Speaker 2: is a bit better for us as an accomy. It

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Speaker 2: does come off.

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Speaker 1: But the thing is it also affects things like oil

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Speaker 1: prices and petrol prices, and rather than worrying about going overseas,

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Speaker 1: I think most people are more worried about the fact

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Speaker 1: that it's going to cost an awful lot more to

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Speaker 1: deliver their goods to market.

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Speaker 2: Yeah, that's true. So as petrol prices lift, petrol prices

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Speaker 2: are actually down at the moment. But if they if

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Speaker 2: they lift on the back of this floor in the currency,

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Speaker 2: then that that acts like attacks on households, and it

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Speaker 2: affects us all, anyone with a car or transport.

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Speaker 1: It hurts, right, Jared, Well, look, I thank you very

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Speaker 1: much and we'll talk again soon and have a great year.

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Speaker 1: It's a year of grace.

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Speaker 2: For more from Heather Dupless Yellen Drive, Listen live to

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