KEY POINTS:
Budgeting services and foodbanks are struggling to cope with unprecedented demand as rising living costs start to bite.
Waiting lists are getting substantially longer and more middle-class families are seeking financial help.
Luxuries are off the menu for all but the highest earners and the social cost is starting to hurt, with stress, depression, break-ups and family violence on the rise.
Mangere Budgeting and Family Support Services chief executive Darryl Evans told the Herald on Sunday families in financial dire straits were experiencing "extreme stress".
More were reporting family violence and elderly guarantors were being chased for missed payments as young relatives sank further into the red.
Evans said that in the past year the waiting time for new clients had risen from 24 hours to between three and five weeks, and many families had seen their weekly grocery bill balloon by $100.
"Demand is at an all-time high. It's always been busy, but now it's like a madhouse," Evans said.
Sue Deason, of North Shore Budgeting Service, reported a 25 per cent jump in the number of new clients since last year.
She said the service's clients now had twice as much debt, were increasingly middle class and were having major problems with their car repayments.
"People feel they must have a car. They borrow more than the car is worth, because finance companies will do that, then they come to us with a clapped-out car which they still owe a lot on. They've also had to borrow to get repairs done."
The Auckland City Mission handed out 4 per cent more food parcels in the first four months of the year, including a 55 per cent jump in April.
Hamilton's Combined Christian Foodbanks handed out 167 parcels last month, up more than a third from April last year.
Some families are selling non-essential items to help make ends meet during difficult times.
Listings on internet auction sites include a plethora of boats, cars and holiday homes for sale.
One Whangarei man, who did not want to be named, said he was struggling to make payments on his 12 rental properties and was selling off all the extras, including the family spa and his $140,000 Audi sports car.
Hamilton couple Fiona and Dion Nevill had also decided to sell their "boys' toys", including their beloved 7.5m game-fishing boat and bright red Holden Monaro.
"We can either sit back and wait for the axe to fall or we can be proactive to survive the economy," Fiona said. "We can't live on the boat."
In the Far North, Lance Ogle was selling his second home in Mangonui.
He wanted $340,000 - down from the original $390,000 asking price - so he could "start living again".
As is the case during most economic downturns, people are still spending to escape financial woes, with Statistics New Zealand revealing bars and clubs are one of the few sectors to record a sales increase during the March quarter.
Debby Giness, of Saatchi & Saatchi's consumer insights team, said the company's research indicated people were splashing out more on "little" luxuries, while leaving big ones until the lean times pass.
"People are cutting back on things like cars, but spending more on nice bottles of wine, massages, or expensive haircuts, because it's a treat they can still afford."
Generally, people were spending less and "for the first time ever" the team had noticed a significant number of respondents setting weekly budgets at the supermarket.
Personal Care Products Council director Garth Wyllie said big cosmetics companies were "feeling about a 3 per cent pinch".
"People still need to buy underarm deodorant and women still like to wear makeup."
But spokespeople for prestige brands said sales were still going strong.
Valerie Riley, general manager of Elizabeth Arden's New Zealand arm, said she was worried during the launch of the brand's high-end Prevage skincare range.
"I was concerned that in the current climate, women may not want to pay $235 for a night cream."
But initial sales figures proved that was not the case.
"It's been very, very successful," she said.
Her husband, who worked at a BMW dealership, had found no drop in sales of the luxury cars.
"I think the people who have the money have not been touched by the problems with the economy.
"I think, unfortunately, it's affecting more the middle class and lower."
High-end hairstylists said people weren't scrimping on hair dos either.
Guy Roberts, owner of top Auckland salon Vada, said he hadn't notice a drop-off in appointments but his clients were bemoaning the state of the economy.
A basic cut cost $135 for women and $90 for men and Roberts' clients weren't all multi-millionaires.
"We've got car mechanics who will still pay $90 for a men's haircut."
Even during troubled economic times the appointment book stayed full, although some clients might cut back on the frequency of their appointments.
"They might come in every six weeks instead of every four... people always want to look good, it's a bit like food.
"You have to eat and you have to have your hair cut."
EVERYONE'S GOT A BARGAIN
Retailers are pulling out all the stops to keep tills ticking - giving hard-up shoppers a dream chance to bag a bargain.
Experts told the Herald on Sunday that sales were becoming more or less permanent, more interest-free deals were available for whiteware and electronic items, and prices were up for negotiation.
Statistics New Zealand figures released last week showed seasonally adjusted retail sales fell by 1.2 per cent in the March quarter - the biggest drop in 11 years. Large chains such as The Warehouse, Briscoe Group and Hallenstein-Glasson have reported falling sales and economists say Auckland businesses are hardest hit.
A stroll around Auckland revealed sales signs everywhere.
Russel Sinclair, of the Retailers Association, said consumers could look forward to more sales as retailers tried all avenues to move stock.
"We are seeing people extending the period of sales, and initiating new offers, such as buy two, get one free.
"Interest-free is also very big at the moment with the bigger-ticket items such as the big white goods and furniture."
Sinclair said the market was flat and it was common for clothing stores to have permanent sales racks.
Consumer NZ chief executive Sue Chetwin said the advent of the perma-sale allowed shoppers to chase a good deal and suggested it may be time to "negotiate" for the best prices.
STATISTICS CONFIRM THE EVER-RISING COST OF LIVING
No you're not imagining things - it's not just groceries and petrol that cost much more than this time last year.
Figures prepared for the Herald on Sunday by Statistics New Zealand reveal the prices of many staple products and services have soared.
Dishwashing liquid, bleach and pantyhose are almost 10 per cent more expensive, with visits to the dentist and optometrist close behind.
Several taxi companies are "carefully considering" raising fares, according to Tim Reddish of the Taxi Federation.
Reddish said fare rises were likely to be about 8 per cent, from around $2.40/km to $2.60/km, but many of the federation's 85 members worried about losing customers.
Major insurance company IAG warned last week that home premiums had risen 15-20 per cent in the past three to five years and the trend was likely to continue.
A note scribbled on an invoice from a small Auckland lawnmowing company said it had raised its prices by 20 per cent because of the "increase in cost of living".
The owner-operators of the Greenacres franchise, Jackie and Jason Martin, said the increase was the first in 12 years.
"In 2004 our mowers cost $30 to fill, now they cost $50," said Jackie.
"Food bills for the family have gone up from $160 to $260, I've had to take a [separate] fulltime job and the cost of everything is just flying."
According to a regular customer, the cost of having a duvet cover cleaned and starched at Olympic Commercial Launderers in Auckland's Grey Lynn has doubled to $20 since 2006.
The owner refused to comment but an employee blamed water and power costs.
With the Commerce Commission considering an investigation into increases in the price of dairy products, ANZ economist Khoon Goh said businesses were feeling the pinch as much as householders.
He doubted if more than a handful were trying to "profiteer" but warned against businesses passing on price rises to consumers, even as a last resort. "When the economy is going well it's much easier to pass price increases on. In the current situation with people spending less it's not good for business long term."
