Caroline Ritchie: Inflation is our real enemy

Last week it was inflation, this week it is interest rates. Nothing remarkable there, given these two economic bedfellows rarely sleep alone.
Last week the Reserve Bank held the official cash rate steady, but the smoke signals coming out of the institution indicate interest rate rises are on the cards for September. I know I keep banging on about inflation, but it's important.
Right now it is sending cash savings into reverse, will shortly cause everyone to fork out a lot more on their floating mortgages and is swiftly increasing the cost of basic essentials.
My question to you - are your earnings keeping pace with all this? I call this the Lawyer's Question - one to which I already know the answer.
The answer, excepting those industrious few on the Rich List, is that wages and salary growth in New Zealand are stagnant. The brass in the pockets of most is staying the same while almost everything else is becoming increasingly expensive.
Inflation now reminds me of a helium balloon at a child's party; under control for a while, but sooner or later soars off out of reach, to tears and shrieks below. I don't see adults crying and screaming over the price of cheese and lamb in the supermarket, but I do hear muttered gasps of surprise. And I see consumers walking away instead of purchasing.
Hopefully these same consumers don't also have enormous mortgages that suck out 75 per cent of their take home pay each month. Hopefully these same consumers didn't sign up for these enormous mortgages at the bottom of the interest rate cycle to try and game the property market and hoping that things will definitely get better and residential property will always appreciate. I've got news for you guys.
So we are not keeping up with the price of living as we know it. The answers put forth in the popular press are simple in theory, either spend less or earn more, or preferably both. Terrific! If only it was that easy to not buy food and never go out, or not have children because they cost too much. And never go to the hairdresser or have a social life, but instead just spend every waking moment working to keep up with inflation.
I have a simpler answer - let's all go and work for the State of Victoria. Government employees there get a 3 per cent pay rise every six months.
Caroline Ritchie is an Investment Advisor 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.