Soaring prices bite

Photo / APN

The rising cost of living is changing the face of New Zealand community life.

A major new Herald on Sunday-Nielsen online survey shows Kiwis have cut back on going to concerts, the movies, restaurants, the pub or away on holiday.

They're cancelling club and association memberships, and are instead hunkering down behind closed doors in homes they struggle to pay for.

"Going out" is seen as a luxury that many of the 3145 survey respondents can ill afford, when their petrol, electricity, gas, medical and food bills are soaring. And it's not just entertainment and activities outside the home that are being curtailed: such Kiwi institutions as lamb chops for dinner, or Friday night fish'n'chips, have been priced out of the reach of many.

Last Sunday, the Herald on Sunday published its own comprehensive survey of consumer prices, conducting 750 price checks around the country and revealing that the average household's shopping bill had risen more than 5 per cent.

That was confirmed on Friday by Statistics NZ, which said the Food Price Index had risen 5.3 per cent in the 12 months to February.

The Reserve Bank cut the official cash rate half a percentage point to 2.5 per cent in what was described by Governor Alan Bollard as an "insurance measure" to stave off a severe downturn in the wake of last month's Christchurch earthquake.

The Treasury has conceded the city's reconstruction is such a large project that it will inevitably have an impact on inflation.

But it is a new survey of 3145 newspaper and magazine readers in the upper half of the North Island, carried out by Nielsen NZ for the Herald on Sunday, that reveals just where that inflation is hurting most and how people are making big changes in their lives to cope.

The survey showed that over the past six months 56 per cent of respondents had been forced to pay more for transport, 67 per cent were paying more for rates and services like water, and 76 per cent had been hit by rises to their power and gas bills.

To balance their budgets, many (42.5 per cent) have been forced to cut back on essentials like clothes and footwear.

But for most people, the first response has been to cut back on so called "frivolous" items such as dining out, takeaways and fast food.

The Nielsen survey showed 41 per cent or people had cut back on social outings to clubs, movies and concerts. And a significant 37 per cent had abandoned holidays.

The impact of such personal cutbacks is not only monetary. With more people staying at home, there is now a major cultural shift in the way New Zealanders are living their everyday lives.

In the survey, one grandmother tells of not seeing much of her grandchildren because she can't afford the petrol; people with guests are not taking them on tour as often - potentially impacting on cafes and restaurants in tourist areas.

Becoming more insular can also lead to other problems such as depression, one counsellor warned.

Auckland mayor Len Brown said the higher cost of living was hurting vulnerable communities, and those on fixed incomes. But he said it was important that people get out and support businesses, the Arts Festival and Pasifika to keep the economy ticking over.