Last week’s data showed that inflation in the year to September 2024 was just 2.2 per cent. That’s down from 5.6 per cent just over a year ago, and 7 per cent in 2022 – a stark reminder of how quickly Kiwi families were going backwards.
This is a significant milestone, because it marks the first time that inflation has been back within the Reserve Bank’s target range of 1 to 3 per cent since March 2021, and it shows that our economic plan is working.
National campaigned on rebuilding the economy and lowering the cost of living, and I am proud to lead a government that is making good on the promises we made and delivering on what New Zealanders elected us to do.
We’ve worked hard to reduce inflationary pressures by restoring discipline to public spending, we’ve stopped the wasteful spending that wasn’t delivering better outcomes, and we are getting rid of the thicket of red and green tape that has stifled investment and economic growth.
Why are those actions important? Because lower inflation and faster economic growth will improve the lives of families across New Zealand.
This inflation data also comes on the back of the Reserve Bank’s recent decision to cut the Official Cash Rate by 50 basis points, which followed the 25-basis point cut in August.
These cuts to the OCR mean that as more and more Kiwis look to refix their mortgages in the months ahead, they will end up with more money in their pockets.
The economy has turned a corner, and it couldn’t be more timely for families that have been doing it pretty tough in recent years. Fewer sleepless nights because mortgage repayments are eating up so much of the pay cheque. Price rises will start slowing at the checkout, easing the pressure on the weekly budget for many. And all of this will make it a little easier for families to put more of their money into savings for a rainy day.
Not only has inflation come down, but our government has delivered income tax relief for hard-working New Zealanders for the first time in 14 years and, combined with FamilyBoost childcare payments and falling inflation, many families are seeing their cost of living move in the right direction for the first time in many years.
And it’s not just families, but also businesses, that will benefit from this improved economic outlook. Now is the green light to invest, innovate and expand. There’s a real sense of optimism returning, and confidence that brighter days are ahead, which will allow local businesses to seize new opportunities. Whether it’s expanding operations, upgrading equipment, or hiring new staff, businesses are ready to grow and contribute even more to their communities.
The recent ANZ Business Outlook and the Mood of the Boardroom report reflects this renewed optimism, showing a rise in business confidence across the country—the highest we’ve seen since 2016.
While there’s still work to be done, the Government’s deliberate and careful plan to manage inflation and rebuild the economy is working. With continued focus and effort, we’re seeing the first signs of a more resilient economy for everyone—families and businesses alike. As we move forward, Kiwis can expect to see more opportunities, greater financial stability, and brighter days ahead. -Hon Christopher Luxon, Prime Minister of New Zealand