The head of the Reserve Bank says much of inflation is being driven by forces outside of New Zealand's control.
Governor of the Reserve Bank Adrian Orr. Photo: RNZ / Dom Thomas
The RBNZ raised the Official Cash Rate by 25-basis-points to one percent this week and signalled a steady lift through this year and into next year to bring inflation under control.
Speaking at the New Zealand Economics Forum, RBNZ governor Adrian Orr said oil prices had been the most notable driver of inflation pressures for New Zealand, but he added that tradable or imported inflation was far more widespread than just oil prices.
"The global economy continues to struggle to supply sufficient goods and services to meet the strong ongoing demand, from both the catch-up of the demand running ahead of supply and the ongoing supply into the future.
"The degree of inflationary pressure experienced across economies has, to some extent, depended on the different starting points and experiences heading into the pandemic.
"Most of our advanced economy trading partners have experienced a long period of very subdued consumer price inflation and persistently high unemployment."
In terms of oil, Orr said higher prices had resulted from global demand, restrained supply during the early stages of the pandemic and as global economic uncertainty increased. More recently, the tensions in Eastern Europe had also had an impact.
"Higher fuel prices are pervasive within the economy, as they are a significant input cost for many firms."
Orr also repeated his comments from Wednesday, that the OCR would be around three percent in the next few years.