Inflation a concern - Prime Minister

Prime Minister John Key says inflation problems are largely behind the control of the Government.

The Government can do little about inflation except rein in its own spending, Prime Minister John Key says.

Statistics New Zealand this morning is to publish the consumer price index for the first three months of the year.

It is expected to show prices rose 4.6 per cent on average in the year to March 31.

Key said inflation problems were largely beyond control of the Government.

"We always worry about inflation... It is concerning, there's no question about that," he told Newstalk ZB this morning.

Key said the Government could not control the price of petrol or the international food market but was trying to limit its own spending.

That had meant the Reserve Bank Governor had been able to lower interest rates which was a boon to households, he told Breakfast on TV One.

Key said he was happy for the Commerce Commission to look into milk prices but said while they were high for consumers the benefit of payouts to farmers was good for the economy.

"It would be a big call to have the regulation of milk."

Challenged about tax cuts benefitting the rich more than those who were struggling Mr Key said two-thirds of workers who gained from cuts were on lower and middle incomes.

"It is certainly true that higher income New Zealanders pay a lot more tax so proportionately they are going to get more."

However he said tax cuts did help people on lower incomes and Working For Families meant a couple on $50,000 or less with two children aged under 18 paid no tax.

Also three quarters of workers paid 17.5 per cent or less as tax.

He defended Government borrowing saying without it the recession would have been longer and unemployment higher.

- NZPA