Economist Cameron Bagrie on whether Government spending is driving inflation

  • 23/07/2022

An economist backs the National Party's claim that a large chunk of New Zealand's consumer price inflation is being driven by Government spending. 

It comes after inflation hit a 32-year high this week - 7.3 percent - with warnings it could stay there until the end of the year. 

"The short answer; yes, the Government has contributed," said independent economist Cameron Bagrie, when asked if a lot of the inflation was being driven by Government spending. "[The] $60 billion COVID relief package has poured an awful lot of money on an inflationary bonfire. 

"Things such as lifting the minimum wage, while admirable, if you're not seeing productivity growth on the other side - that's going to add the unit right across its cost rates to the additional $0.50 you end up paying for your cup of coffee," Bagrie told Newshub Nation.

But, despite this, he said the economy couldn't expect the Government to do all the heavy lifting.

"Businesses need to be doing a lot of heavy lifting here as well," Bagrie said. "We're all in this sort of stuff together."

Bagrie urged the Government to move away from "demand stimulus" fiscal policies to help ease the economic burdens.

"I need to get into the ins and outs of the New Zealand economy... How do we make the New Zealand economy able to grow faster, consistently, year after year?"

The Government has consistently dismissed its spending was stoking high inflation, instead blaming global economic factors

Watch the full interview above.

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