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Speaker 1: Beef mint steak driving the latest spike and food prices.

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Speaker 1: Annual food inflation hit four and a half percent for February.

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Speaker 1: That's up from four point two percent in January. Mintce

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Speaker 1: had a record twenty four to forty six a kilo,

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Speaker 1: fruit and veggies up nearly ten percent for the year.

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Speaker 1: Mike Jones benz In Chief Economists on US this morning, Morning, Mike,

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Speaker 1: good morning. The beef mints thing is a basic supply

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Speaker 1: demand one, isn't it.

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Speaker 2: Yeah, the global meat prices have been on the up

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Speaker 2: in In fact, beef prices are at record levels, largely driven

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Speaker 2: out of very short supply in the US. You've got

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Speaker 2: US beef heard at the lowest level since nineteen fifty one.

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Speaker 2: You've got demand in the US and China at pretty

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Speaker 2: good sorts of levels, and that's squeezing prices up. Obviously

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Speaker 2: good for our beef producers and exporters, but but not

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Speaker 2: secret shoppers.

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Speaker 1: What does it mean for because this is the SPI,

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Speaker 1: not the CPI, So what does it mean for inflation?

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Speaker 1: Because it feeds into it.

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Speaker 2: Right, it does. Yeah, I mean there's always a few

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Speaker 2: sort overs and unders in the SPI. It's taken as

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Speaker 2: a whole. It wasn't anything in the number yesterday to

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Speaker 2: change our overall inflation view. So we've got a two

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Speaker 2: point nine percent CPI forecast or the first quarter that

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Speaker 2: hasn't changed. Obviously, it's been overtaken by events somewhat because

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Speaker 2: we know it's the second quarter that's really going to

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Speaker 2: be at the brunt of the spike and petrol prices

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Speaker 2: that we are seeing. So we've got three point eight

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Speaker 2: percent forecast for Q two and then inflation stays above

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Speaker 2: three percent now for the rest of the year on our.

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Speaker 1: Numbers, do you think the governments I saw some economists

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Speaker 1: es today saying the government's worst case scenario are too conservative.

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Speaker 1: Do you agree with them?

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Speaker 2: On inflation? The worst case was was three point seven.

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Speaker 2: Now our sort of central view now, as I said,

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Speaker 2: is three point eighth. So on that basis, three point

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Speaker 2: seven could be a bit light. Of course, we've probably

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Speaker 2: had the benefit of a few more days and maybe

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Speaker 2: even a week of information, and what we've seen in

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Speaker 2: the current environment is that forecasts and assumptions that are

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Speaker 2: going out of date pretty quickly.

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Speaker 1: You said above three for the rest of the year,

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Speaker 1: how far above three? Above four?

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Speaker 2: Not above four? I mean, things are moving around, but

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Speaker 2: we have the peak in the second court at three

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Speaker 2: point eight and then coming down to just a smidge

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Speaker 2: above three by the end of this year. But as

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Speaker 2: I say, these things can and probably will change again

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Speaker 2: as we go through.

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Speaker 1: Mike, the RBA put the rate up use today, but

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Speaker 1: there are a different kettle of fish with their inflation rate.

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Speaker 1: What do you think. I mean, although you're expecting inflation

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Speaker 1: to go high, does that necessarily mean the Reserve Bank

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Speaker 1: here will hike or hike higher faster or sooner.

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Speaker 2: No. I think the ABA was interesting, and we know

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Speaker 2: that the Reserve Bank here of course, is looking to

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Speaker 2: what offshore central banks do to respond to this shock.

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Speaker 2: I mean, there's a pretty live debate about what you

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Speaker 2: can and should do in response to a supply shock

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Speaker 2: like this. I think what we'll see from the Reserve

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Speaker 2: Bank of New Zealand is basically a period of watching

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Speaker 2: and waiting. They've got the luxury to some extent of

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Speaker 2: not having to meet and announce interest rates for another

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Speaker 2: three weeks or so, so the will could be quite

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Speaker 2: different in three weeks time. But look, we are expecting

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Speaker 2: a move up in indust rates, but not till much later.

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Speaker 1: In the year in September, Mike, appreciate your analysis this morning.

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Speaker 1: Thank you, Mike Jones being Z Chief Economy.

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