Mortgage holders to be SLAMMED more: Another big OCR expected

PHOTO: That will drag mortgage rates up as well. Image – Getty Images / Newshub.

Prices keep going up – inflation has hit a 32-year high with housing, food and fuel costs pushing the annual rate to 7.3 percent.

That’s up from 6.9 percent and higher than most economists expected. ANZ is now predicting the will rise to 4 percent in November and that’ll drag mortgage rates up with it.

Economists are also worried about price rises spreading through more and more items, with 66 percent of all items monitored increasing in price in the June quarter.

The thing about quiche, custard tarts and eclairs is you can’t make them without eggs, dairy and flour. You also can’t deliver the treats without petrol.

The price of the key elements of AroBake – ingredients and petrol – are the key drivers of inflation.

“Prices are going up and if you’re not always watching, all of a sudden, your margins disappear,” said Maximilian Fuhrer of Arobake.

“We added a dollar onto the delivery costs from $6.50 to $7.50 just cause, it’s just been a huge jump.”

StatsNZ, the Government’s records keeper, on Monday confirmed what everyone’s been feeling: inflation is up 7.3 percent.

What does the official cash rate increase mean for first home buyers?

“Right around the world, people are feeling the effects and that’s happening here in New Zealand,” said Finance Minister Grant Robertson.

Inflation has become seemingly almost inescapable.

“It’s not just one thing here and there, it’s a lot of prices that are continuing to rise. That broad-based inflation is the sort of worry that we have when the Reserve Bank is trying to get things under control,” said Infometrics principal economist Brad Olsen.

INTEREST RATES BITE: Property sales down 38% on year ago, 43% in Auckland

That means debt will likely get even more expensive. To stifle inflation, the Reserve Bank has one tool – the Official Cash Rate. Olsen is predicting it will climb another 50 basis points.

“It’s got a job to do. It knows what it has to do but it is very uncomfortable.”

ACT wants the Reserve Bank Governor to curb inflation, or else.

“Adrian Orr has been asked to get inflation under control in the ‘medium term’, well he needs to be held accountable,” said Seymour.