Caroline Ritchie: Inflation changing face of Kiwi financial landscape

How often do men think about inflation? Once a day, every day, all day? Which begs the question: How often do women think about inflation? Straight answer - authorised financial advisers, both boys and girls, are thinking about inflation from dusk till dawn at the moment.
Floating mortgage holders - did you notice what happened last week?
That's inflation costing you more each month, despite the official cash rate being on hold.
Inflation is going to stalk your wallet and cut your discretionary spending. It already has in the supermarket and at the gas pump - but it's going to really hurt if you are heavily in debt over a property.
The commercial banks have moved before the RBNZ to increase floating mortgage rates.
Common, say the conspiracy theorists, in a rising rate environment, less common, when rates are heading downwards. In a stagnant or deflationary environment, these chaps say, the banks wait for the Reserve Bank to move, then wait for each other to move, then move reluctantly.
The reality is different, as anyone who has worked for a bank might know.
Banks make money on the margin - the difference between what they lend money at and borrow money at. Plus healthy fees, of course.
For some, margins have never been better. My bank has charged the same interest on my credit card for the last eight years, despite nominal interest rates fluctuating wildly.
And it's a high interest rate.
While some pay their credit cards off in full each month, there are lots of consumers paying this credit card interest rate, while being offered less than 3 per cent for any savings they might hold with the same institution, and who will now face higher floating mortgage rates into the foreseeable future. Anyhow, that's how banks work. Back to inflation.
The only real solid and proven ways to counteract inflation are to buy some specific inflation-linked fixed interest investments, (we do actually have a few of these listed on our exchange), or to invest in businesses that can, in near term perpetuity, pass on all inflationary costs to the customer without cannibalising their client base.
Happily, these exist too, on a stockmarket near you.
Caroline Ritchie is an investment adviser with Forsyth Barr in Napier. She can be contacted on 0800 367 227 or caroline.ritchie@forsythbarr.co.nz.
Her disclosure statement is available on request and free of charge. This column is general in nature and should not be regarded as personalised investment advice.