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.
Phil Walter | Getty Images News | Getty Images
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-litre tank of petrol by more than 11 New Zealand dollars ($6.77) and for a 60-litre 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%.
TL;DR
New Zealand is extending cuts to fuel excise tax, road user charges, and public transport fares until the end of January to help families facing high living costs due to inflation. This extension follows previous measures aimed at reducing the financial burden on citizens amid rising petrol and food prices.
- The government initially cut fuel excise tax by 25 cents per liter in March, with extensions since then.
- The changes are expected to lower the cost of filling a 40-liter petrol tank by over NZ$11.
- Despite these measures, inflation is projected to remain elevated, peaking at around 7% in mid-2022.
New Zealand has extended the cuts in fuel excise tax, road user charges, and public transport fares to help families cope with rising living costs due to strong inflationary pressures. This extension aims to provide some financial relief as petrol prices and other costs continue to rise.
The cuts in fuel excise tax are expected to reduce the cost of filling up a 40-litre tank of petrol by more than NZ$11 and a 60-litre tank by over NZ$17, providing significant savings for consumers.
The Treasury estimates that the combined impact of these tax cuts will reduce headline inflation by 0.5 percentage points in the June quarter, although inflation is expected to remain elevated for some time.
Previously, the government cut the fuel excise tax by 25 cents per liter and similarly reduced road user charges for three months, with extensions made to these measures as inflation continued to rise.
Fuel prices in New Zealand have been significantly affected by global events, particularly the rise in prices following Russia's attack on Ukraine, contributing to overall inflation and increased living costs.