Leading economist says Omicron peak and Ukraine war will see inflation rise to its 'worst' in decades

A leading economist says New Zealand is in a perfect economic storm with the Omicron peak constricting supplies here just as the war in Ukraine constrains the supply of goods globally. 

Brad Olsen from Infometrics says inflation's already high but we should brace for a rise.

The numbers at the petrol pumps are eye-watering, with locals calling it "ridiculous".

"Oh just insane - almost three dollars you can't afford these prices now," One person said.

In fact, 91 has passed three dollars in many parts of Auckland after the West imposed sanctions on Russia which supplies 5 percent of the world's oil.

"Ukraine has been factoring in for some time and now that it's, now that it's in full force ah you know that's the big driving factor behind it," Gull general manager Dave Bodger said.

Everywhere else you look there are signs our economy's struggling, with empty supermarket shelves reflecting the absence of workers right through the supply chain.

"We're calling it operation do your best - right now nothing is certain. every part of the supply chain's under immense pressure," Food and Grocery Council CEO Katherine Rich says.

That's staff shortages from manufacturing to distribution right through to retail, with Countdown confirming it has lost 1400 staff to Omicron - but everywhere is hurting.

"At best ten percent but at worse 50 per cent and for those who are facing half their staff on and unwell that's really, really challenging," Rich says.

The Road Transport Association's asking retired truckies to return as Auckland truck companies lose up to one in five staff.

"And what we're going to do is match those people up to transport operators and if it's one or two or five or ten shifts that could be really helpful when things get really bad," Ia Ara Aotearoa Transporting CEO Nick Leggett says.

Economist Brad Olsen says the economy's being battered on all sides.

"We are seeing the perfect storm of extreme economic disruption," Olsen says. "Because of the necessity of our health response people are isolating at home we've got a lot of people that cannot do their jobs and at the same time global markets are still in turmoil as we work to establish what the Russian invasion of Ukraine means."

Inflation's already running at 5.9 percent, its worse in 32 years, the Reserve Bank expects it to hit 6.6, but Olsen sees it going higher. 

"We're certainly not on our knees, we're able to move through but the economy is operating at reduced capacity and it will be for the next month," he says.

And in that time we'll just have to get used to operation 'do your best'.