Here’s a preview of Thursday’s Chorus Substack Live for paying subscribers here on Substack Live today at 9:15am, including the key news in Aotearoa’s political economy around housing, climate and poverty and my Picks ‘n Mixes of links elsewhere. I’ll focus on these six things in the Substack Live:
Household living cost indices published yesterday showed prices for those on the lowest incomes have risen 7.9% since the change of Government, while prices for the highest earning households rose 4.4%. That’s because electricity, food and fuel prices rose faster than inflation generally, and are a bigger share of spending by the poor, while the rich have benefited from a fall in mortgage rates and spend proportionally less on those essentials.
The Government’s moves to index (non-superannuation) benefits to CPI inflation (6.4% since December 2023), rather than wages (6.8%), and to increase the minimum wage by just 3.5%, have compounded the cost-of-living pain for the poorest working households and beneficiaries.
The way the Reserve Bank sets interest rates is worsening the pain. Its pursuit of CPI inflation of 1-3% means it doesn’t take into account the benefits of falling mortgage rates, which aren’t included in the CPI, but does hold rates higher than they otherwise would be because structurally higher capital costs from Government moves charge users directly for water and power borrowing costs are included in the CPI, whereas they weren’t before. This risks creating a self-reinforcing rate-hike spiral as the RBNZ hikes the OCR in response to higher electricity and water capital costs, which in turn further increases those costs.
This morning’s scoop of the day is from Thomas Coughlan at NZ Herald-$, who reports Winston Peters had to talk Christopher Luxon down from supporting the US attack on Iran. Peters’ decision to disclose that internal discussions to the Herald has now angered Luxon, creating more division in the coalition.
In news out overnight, the Strait of Hormuz looks set to be closed for much longer after Trump rejected an Iranian offer to open it and told aides and oil executives he’d be comfortable keeping the Strait closed for many months to pressure Iran into giving up its nuclear material. That pushed the oil price up 6% to US$118/barrel overnight, its highest level since the Iran conflict began.
In good news, the world’s biggest battery maker, CATL, has just done a deal to mass-produce sodium batteries for grid-scale solar battery farms, potentially reducing electricity storage costs dramatically.
The presentation I’ll use, which includes the front pages of news sites and newspapers at 5am this morning, is attached below the fold.
Looking forward to seeing paying subscribers at 9.15 am here. A recorded version of the video will be emailed later.