Retirement Planning for inflation

Inflation is the speed at which prices are rising. If the prices of things you and I buy go up quickly, then inflation is high. If those prices go up more slowly, then inflation is low.

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Inflation (CPI) Annual change in New Zealand - Graph

Data type: CPI Inflation Source: Stats NZ
Got a question or comment about this data? 
Put your questions and thoughts in the comments section (below).

What is inflation?

Inflation is the speed at which prices are rising. 
If the prices of things you and I buy go up quickly, then inflation is high. 
If those prices go up more slowly, then inflation is low. 
It’s important to note that inflation is not the same as “the price of things.”
Let’s say inflation comes down from 5% to 2%. 
The prices of the things we buy at the supermarket haven’t decreased. Those prices are still going up. But they’re not increasing in price as quickly. 
Rather than prices rising at 5%, they’re now growing at 2%.

Where does the data come from?

The data comes from Stats NZ. 
Inflation is typically measured as the change in the <a href="https://www.stats.govt.nz/topics/consumers-price-index#:~:text=The%20consumers%20price%20index%20(CPI,importance%20based%20on%20spending%20patterns.">Consumer Price Index</a> (CPI).
There are other measures of inflation that economists sometimes talk about too. However, CPI inflation is the main one.
The CPI measures the changes in the price of the things that New Zealand households typically buy.
This includes food, electricity, clothing, shoes and a range of other goods and services.
Stats NZ tracks the prices of all these things, then reports on how quickly that total ‘basket’ of goods is increasing in price. That’s CPI inflation, which is what is shown in the graph.

How does inflation impact house prices?

There are two main impacts – 
Firstly, the Reserve Bank will work to increase mortgage interest rates if inflation is too high. 
This can temporarily harm property prices as mortgages become more expensive. So fewer people buy properties. This softens property prices.
However, over the longer term, inflation helps property prices appreciate. 
That’s because the price of most goods rise and incomes increase. This natural increase happens within the property market too.

Can I download the data?

Yes. While we don’t have a feature that lets you download the data on our website, you can download the data directly from Stats NZ.
Stats NZ releases new inflation data every quarter.
However, they create a new page on their website every time the data is released. That’s why it’s best to google “statistics nz inflation data” to download the latest numbers.
Here is an example of <a href="https://www.stats.govt.nz/news/annual-inflation-6-7-percent/#:~:text=The%20consumers%20price%20index%20increased,12%20months%20to%20December%202022.">one of their data releases</a> from April 2023.

Can I reference the data in my article or research project?

Yes, you can reference the data if you are writing a report, article, or research project. 
If you do, it’s best to reference that the data comes from Stats NZ.
That way, if people want to check the updated data, they know where to find it.

Inflation (CPI) Annual change

Inflation (CPI) Annual change

What is inflation?

Where does the data come from?

How does inflation impact house prices?

Can I download the data?

Can I reference the data in my article or research project?

Ed McKnight

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