‘‘Robertson is walking a tightrope: Doing nothing is callous when people are struggling but doing too much ri

Treasury warned this week that ‘‘inflation has surfaced as the principal economic challenge in New Zealand and abroad’’, reinforcing what households, businesses, and increasingly the government have become acutely aware of in recent months: it’s getting more expensive to live, and that the deeply personal cost to households when they go to the supermarket, fill up the car, or pay the rent trumps any other challenge out there.

In response to the fastest inflation in a generation, the Government this week announced a $1 billion temporary cost-of-living package, with the cuts to fuel taxes and half-price public transport extended until August, and a new $27-a-week Cost-ofLiving Payment from August to October for

2.1 million lower-income earners.

Give inflation an inch and it’ll take a mile is the problem that governments around the world are facing as households pay the price for central banks moving too slowly to address rising costs as economies found their feet again. For inflation, as with most problems, there are no easy and costless solutions. Finance Minister Grant Robertson is walking a tightrope between a rock and a hard place. Doing nothing is callous when people are struggling to make ends meet; but doing too much risks pouring more inflationary fuel on the bonfire already in front of us. As usual, the end result is one that leaves everyone unhappy. Higher earners got nothing – but that was the point of targeted support, and they’ve got more choices over how to adjust their spending. Middle-income earners will feel that $27pw is better than nothing, but not nearly enough to fix the budget problem. The lowest income earners are left wondering why they didn’t get a bigger top-up, given the pressure that their meagre budgets are already under. Treasury, IRD, and MSD are all left frustrated that their evidence-based