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The CPI and The National wage case decision



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MEDIA RELEASE29 April 1998 THE CPI AND THE NATIONAL WAGE CASE DECISION

Statement by Mark Paterson, Chief Executive

There is no little irony in the release of today’s CPI at -0.2% across the year and the handing down of the National Wage Case decision which has raised the minimum award rate by 3.9%.

Keeping inflation low is now going to be far more difficult that it was.

The main reason for the fall in the cost of living has been the fall in housing mortgage costs. The fall in interest rates was itself due to the comprehensive slowing of prices throughout the economy.

Will the wage case decision now lead to a rise in the prices of consumer goods? It is easy to see that from here there is only one direction that prices can go and that is up.

It is clear that the decision can only do harm, to our low inflation rate and to our employment prospects.

The CPI figures today only underscore how much is at stake. Inflation has been low. Now, because of the wage case decision, our low inflation rate is at serious risk.

It will have been a very bitter irony if the low rate of inflation of the past year made the Commission believe inflation has been permanently suppressed and that a higher increase is possible without serious risk to the CPI.

For further comment, please contact: Mr Mark Paterson 02 6273 2311 (B/H) Chief Executive 016 280 664 (pager)

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