The New Zealand government announced on Monday that it would reduce the fuel excise tax and halve public transportation fares for three months to help offset the rise in gasoline prices caused by the Ukraine conflict.
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 significantly to the country’s significant inflation.
Economists predicted that inflation in New Zealand would exceed 7% this year, and they do not rule out a peak above 8%.
“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 ($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%.