It is better for voters to be aware of this before the election rather than be given the bad news three days later. Though most people will probably accept the need for a degree of austerity to help get inflation down, it makes for a grumpy, cynical climate of public opinion when they feel, quite justifiably, they could have been warned before they voted.
It is being said of this election campaign that people are tuning out because there is an air of unreality about it. The various issues being debated are not the ones that might be motivating many voters. Part of that may be a realisation that inflation is more than a “cost of living crisis”, and for many it is not even that.
New Zealand’s median weekly pay rate has risen by more than the CPI in each of the past two years. As the Herald’s Liam Dann wrote when he reported the 7.1 per cent rise for the year to June: “Inflation may not be adding to the cost of living for many Kiwis”.
A median is the point at which half the people are above and half the people are below it, but even if everybody’s income was keeping pace with price rises, inflation would still be a debilitating problem for the economy. Inflation is a cancer that discourages productive investment and gradually devalues the currency making it harder to sustain our living standard.
Central banks can contain inflation once it is down but to get it down they need governments to reduce their spending too. Let’s vote with our eyes open.