Ok, I’m coming permanently out of “proper blogging” retirement. Why?

The New Zealand government has decided to cut fuel taxes and RUC due to the “cost of living crisis” in New Zealand – egged on by the opposition and a range of New Zealand thinktanks and “thought leaders”. When a similar spike occurred in 2008 such a suggestion would have been ridiculed for being the ill thought out and incoherent policy it is – now it is the sort of stuff that gets a cross-party consensus and loud repeated cheers from the tens of New Zealand Twitterazzi.

Honestly, what is wrong with policy debate in New Zealand – when did we go from caring about policy outcomes and trade-offs to treating every policy decision as something that must be done urgently as if we are in the middle of an episode of West Wing. I mean, read the analysis in the two front-page articles on Stuff (here and here) – it is all politics and no consideration of trade-offs.

Want to understand why I see things this way – click the tab and read on.

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Walking down the street everyone is abuzz with the recent CPI numbers. 5.9% inflation! Someone’s failed! Economists are wrong for some reason! Freeze prices! Slash things! Destroy capitalists! Suppress workers! Random noises!

I’ve heard it all.

However, it made me realise something. I haven’t looked at the details of the CPI numbers for years. If the situation has changed then my inattention to these numbers may lead to me making silly decisions. Furthermore, other people’s attention to these numbers may make inflation more responsive to the CPI releases – meaning that there is more value in me paying attention.

Given all of this, and given that I wanted to reacquaint myself with the new version of the Stats NZ website, I’ve put together an excessively long video exploring the CPI data at the “product class” level. In it I also have a look at some price stickiness measures, looks at some other inflation numbers, and fail to put particularly nice labels on scatterplots – this can be found here.

If you prefer 4 minute summary videos instead, then I run through the key ideas in 3 graphs here. And if you prefer to get your own hands dirty with the data, rather than listening to me drone one, jump over here to use my R code and access Stats NZ’s data.

Do I reach any exciting policy conclusions, or give a forecast of where we are going in any of this – no. Did I have fun, and feel like I have a better understanding of the type of shock New Zealand is experiencing at the moment – yes.

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