![]() ![]() It means that with lower real incomes, our spending power on items like food, services, health, education, houses and other assets will be squeezed further.Īs a result, the growth in real incomes will be weak. The end result is inevitable – a rise in the cost of living. Even as the real economy weakens, the government is proposing further austerity measures, including the scrapping of capital gains tax on housing and a 5% boost in GST to 20%. The banking regulator is also capping rates at 4.5% instead of the 6% previously suggested. Now the Reserve Bank of New Zealand has released the latest inflation-inflation forward guidance, which again confirms the rapid pace of this rise. We have written previously about the slow creep of US money holdings back into the financial system.
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