An independent economist is was warning New Zealand will see a different economic outlook at the end of the year as inflation hits.
Independent Economist Cameron Bagrie told AM on Thursday, New Zealand's economy is at an inflection point but there is nothing "distressing" in the credit card numbers in terms of individuals struggling to pay off their bills.
"If you look at the overall story in terms of credit cards numbers, we are still in pretty good shape," he said.
"Did we see a bit of a pop post-Christmas in regards to people being a little bit slow in paying off the credit cards, yes because we tend to put a fair bit on them around the months of November and December. But there is nothing distressing within the credit card numbers at the moment to suggest the economy has hit a major turning point.
"Credit card numbers are just one of those stress indicators that we keep a pretty close eye on."
Bagrie said there is a "fundamental inflation problem out there" and he expects to see inflation get up to around seven percent.
It comes after the Consumer Price Index (CPI) figures released by StatsNZ in January showed the biggest annual inflation jump in three decades.
Annual price inflation (the difference between the December 2020 quarter and the December 2021 quarter), hit 5.9 percent, up from 4.9 percent in the previous (September) quarter.
Bagrie told AM the back end of 2022 might be a struggle with inflation hitting hard.
"Everybody has got the same old inflation problems. When you have an inflation problem you need to take interest rates up," he said.
"Interest rates rises are not good for asset prices. Interest rates rises are not good for growth, so we are going to see a different economic story in the back half of the year.
"We will see a different story in regards to what is coming out of credit cards. We will see a different story in regards to Xero's data, whether businesses are paying their bills so we will start to see a different story in terms of bank non-compliance."
It comes as New Zealand goes through a cost of living crisis with Kiwis spending on average an extra $4000 and $5000 in the past 12 months on basics such as food, rent and fuel. The majority of the increase is fuel with an extra $678 a year at the pump on average.
Watch the full interview