ZB

Economist: We must be careful adding to aggregate demand with more spending

Author
Newstalk ZB,
Publish Date
Fri, 20 May 2022, 7:09am
(Photo / Getty Images)
(Photo / Getty Images)

Economist: We must be careful adding to aggregate demand with more spending

Author
Newstalk ZB,
Publish Date
Fri, 20 May 2022, 7:09am

There are concerns there's a risk we become a mouse on an exercise wheel.

One of the key parts of the Budget is a billion dollar cost-of-living package, which includes $350 dollars for people who earn less than $70, 000 per year, and don't get the Winter Energy Payment.

Economist Cameron Bagrie told Mike Hosking as inflation goes up, and if we start spending more on the other side to compensate, that adds more to aggregate demand.

He says if you have people spending a bit more, that adds more to inflation and then you look to compensate other side again - and the mouse on the wheel is going round and round.

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