WELLINGTON: New Zealand's government said on Monday (Mar 14) it would reduce the fuel excise tax and halve public transport fares for three months to help offset the surge in petrol prices caused by the war in Ukraine.
Petrol prices in New Zealand, like the rest of the world, have risen sharply since Russia's invasion of Ukraine, as have food and building costs, contributing to significant inflation in the country.
Economists had expected inflation in New Zealand to rise above 7 per cent this year and are not ruling out a peak above 8 per cent.
"We cannot control the war in Ukraine nor the continued volatility of fuel prices but we can take steps to reduce the impact on New Zealand families," New Zealand Prime Minister Jacinda Ardern said in a statement.
The government also said it will also reduce fuel usage charges by 25 New Zealand cents.
It said it estimates the changes will reduce the cost of filling up a 40 litre tank of petrol by more than NZ$11 (US$7.46), and for a 60 litre tank, more than NZ$17.
The government is also reducing road user charges – a charge levied on diesel vehicle users – by 25 New Zealand cents.
"This energy crisis would present a crisis for many families in the here and now. And that's why we are targeting short-term measures to manage the immediate pain for everyone," Ardern said at a press conference.
ANZ Bank in New Zealand said the government's cost relief could help bring year-on-year inflation in the June quarter down 0.5 percentage points below its current forecast of 7.4 per cent.