In this month's feature we discuss the class character of New Zealand's inflation policy. Under our current settings, higher unemployment is the price paid for lower inflation. This means that working class people are hurt the most when the Reserve Bank hikes interest rates to reduce inflation. Stability in prices is certainly desirable. But so is the minimisation of unemployment. We need to strike a better balance between these two objectives. This means bringing full employment back onto the economic policy agenda.
In our regular updates, we discuss the September quarter data for employment, wages, union membership, and social welfare. Overall, the job market remains very weak, with little evidence of any recovery. We also discuss the September quarter data for consumer inflation and household living costs inflation. The latter measure shows how unequal the decline in inflation has been over the past year. Annual living costs inflation was only 0.8% for households in the highest expenditure quintile but was 4% for households in the lowest quintile.
As usual, we provide a snapshot of wage and employment data on pages 3 and 4. For analysis of the latest GDP data, please see the September Bulletin.
