SYDNEY — New Zealand said on Sunday it is extending the duration of cuts in fuel excise tax, road user charges and public transport fares by five months until the end of January, as families struggle with higher living costs amid strong inflationary pressures.
Petrol prices in New Zealand, like elsewhere, have risen sharply since Russia’s attack on Ukraine started in February, contributing to significant inflation. Food prices rose 1.2% in June, while they rose 6.6% from the same month last year.
“There’s no easy fix for the cost of living, but we’re taking a range of actions to ease the pressure on families,” Finance Minister Grant Robertson said in a statement.
“We want Kiwis to have some certainty over the coming months in the face of volatile prices at the pump.”
The government in March cut the fuel excise tax by 25 cents a liter and road user charges – a charge levied on diesel vehicle users – by as much for three months. The temporary measure was extended again in May until mid-August.
Authorities flagged the changes will reduce the cost of filling up a 40-liter tank of petrol by more than NZ$11 ($6.77) and for a 60-liter tank by more than NZ$17.
The Treasury estimates the combined impact of policy will reduce headline inflation by 0.5 percentage points in the June quarter, Robertson said.
But he warned inflation will likely “stay for some time at levels higher than we have seen in recent years” even as economists forecast it would peak in the June quarter.
On Wednesday, the Reserve Bank of New Zealand (RBNZ) delivered its sixth straight interest rate rise and signaled it remained comfortable with its planned aggressive tightening path to restrain runaway inflation.
RBNZ has forecast inflation peaking at 7.0% in the second quarter of 2022, well above its target of 1% to 3%. ($1 = 1.6236 New Zealand dollars) (Reporting by Renju Jose in Sydney; Editing by Muralikumar Anantharaman)
Financial Post Top Stories
Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300