- Hon Nicola Willis
Finance Minister Nicola Willis has hailed a drop in the domestic component of inflation, saying it increases the prospect of mortgage rate reductions and a lower cost of living for Kiwi households.
Stats NZ reported today that inflation was 2.2 per cent in the year to December, the second consecutive quarter that the annual rate has been within the Reserve Bank's target band of 1-3 per cent.
"The domestic component of that inflation - non-tradables - declined from 4.9 per cent in the year to September to 4.5 per cent in the year to December.
"Decisions about the Official Cash Rate are a matter for the Reserve Bank but the decline in domestic inflation is good news for people with mortgages.
"Together with other recent economic data showing there is spare capacity in the economy, it suggests there is scope for further rate reductions in the coming months.
"It also shows the steps the Government has taken to reduce inflationary pressures by restoring discipline to public expenditure are working.
"Lower inflation and interest rates set the foundations for economic growth, and the investment, jobs and incomes it creates.
"The benefits of restoring discipline to public spending are starting to flow through to people's bank accounts. Recent data published by the Reserve Bank shows the average interest rate paid on residential mortgages fell in November for the first time since September 2021.
"Further drops in coming months will reduce cost of living pressures on households, free up cash to be spent in local businesses and encourage investment and growth."
