Families feel the squeeze of rising prices

A Reduced to Clear shopping outlet. Photo / Doug Sherring

Last week, the Herald on Sunday published its 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. Milk, cheese and eggs were up 9.5 per cent, and vegetables were up 11.5 per cent, year-on-year. Green Party co-leader Metiria Turei points the finger at the supermarket "duopoly" of Progressive Enterprises and Foodstuffs as being partly to blame for prices.

Counsellor Sylvia Jennings has spent years helping other people resolve their deep seated personal problems. But it's the skyrocketing cost of living that has forced the silver haired 56-year-old from Otahuhu to dramatically change her own life.

She's dispensed with what she now considers luxury items, such as good-quality eggs, cheddar cheese, drinking chocolate and biscuits, and shops strictly by price - and nutritional value.

"I've downsized my shop," says Jennings, who shares a home with her adult son. "Where I used to spend $150 to $200 a week I now spend $60 to $80. With everything going up it got to the point where I had to prioritise.

"I need petrol to go to work so I've cut back on grocery items. But I also look at labels more. I want good prices, good nutrition and good value."

As for those staples of the Kiwi diet, she hasn't had a roast for about six years - lamb is too expensive and she thinks the best meat is being exported.

Friday night fish'n'chips were part of growing up in New Zealand for Jennings-but she hasn't had them
for more than a year. It is sad, she says, that such rites of passages for Kiwi kids are being lost.

In the next aisle Jessica Baker, a single mum from Manukau, is trying to contain the excitement of her young son, Bailey, as they pass a great stash of heavily discounted chocolate products.

"It's his 5th birthday on Sunday," she confides. "We have a tight budget but I come here for the specials -and to buy Bailey treats."

The women have vastly different backgrounds and lifestyles, but their attitudes are reflected in the hundreds of shoppers who head each week to discount chain Reduced to Clear as a budget-making prelude to their main shop.

Sean Hills opened the Manukau outlet three years ago, and three more have opened since (another in Auckland and two in Wellington).

Next month a fifth store will open in Hamilton. Hills says he is seeing many more middle- and upper income customers these days as inflation continues to bite.

Reduced to Clear sells a limited number of products. But its appeal is growing because these are discounted by as much as 80 per cent, either because they are discontinued lines, have passed their "best before" date, or are simply cancelled exports.

"We buy food from our suppliers that would otherwise go to waste-and we still bargain hard over the pricing," said Hills, who had only around 40 products when he set up, compared to about 700 today.

"These products are not passed their 'use by' date - that would clearly be unsafe - simply the 'best before' date. And that buys many products, such as nuts, chocolate, or some tinned goods, an extra three months. I think we've helped change the way people shop and been part of the food revolution that's going on right now."

"Food prices are rising and for those on the lowest incomes every increase creates further hardship," she says.

But it is fair to say that much of the rising cost of living is caused by worldwide changes: higher population, more demand, less arable land for farming, renewed troubles around the Middle East oil fields...

Official figures on non-food items - including household products, alcohol and consumer electronics - are due out next month. But the newspaper's survey indicates they've also increased dramatically. Cigarettes have risen 24 per cent and 91 Unleaded petrol has risen 19 per cent, factoring in last year's 2.5 per cent GST rise and this week's petrol hike.

Now, a new survey of 3145 newspaper and magazine readers in the upper half of the North Island reveals Kiwis are making dramatic changes to their lifestyles to deal with the rising costs.

The survey was conducted online for the Herald on Sunday by Nielsen NZ, which also does scan-data research for Statistics NZ.

It reveals that, in the past six months, people have been forced to pay more for inescapable costs such as transport (55.7 per cent of respondents), rates and services (67.4 per cent), and electricity and gas for the home (76.3 per cent).

So they have cut back on discretionary items: almost half of respondents say they're spending less on dining out, takeaways and fast food. Nearly as many have cut back on clothes and footwear (42.5 per cent), and on club memberships and events, such as movies and concerts (41.4 per cent). More than one in three (34.9 per cent) are spending less on booze.

Certainly, budgeting has become no easier for Aphrodite Hannah, 45, a mother of two teenagers, both home schooled, and her husband Bill, of Auckland, since the Herald on Sunday spoke to them about the effects of the increase in GST last October.

And it's not only food prices that are suffocating their finances. "My average spend on food was $130 a week then. Now it's more like $180," says Hannah.

"Then there's the reduction in Family Assistance in Work which has gone down from $100 to around $70. My husband got a pay rise, but it's all been eaten up.

"I used to shop weekly but now shop fortnightly. And we can't afford everything we want all the time.Our life insurance, household costs, car insurance, they've all gone up," she says.

"Cheese has become a luxury item now. Even potatoes have gone up like crazy. I've swapped to homebrand sugar, and teabags with no brand. And we grow a lot of our own vegetables. But even so, the kids are often heard saying: 'There's nothing to eat in the house'."

Conal Martin, 37, and his wife Joena, 34, who also spoke to the Herald on Sunday in October, are faring somewhat better.

High-income earners, the Auckland couple have a household income of around $200,000 a year. They and their 2-year-old daughter Sophie have not been forced to cut back. But Martin says they are feeling the pressure and have now changed the way they shop.

"We started shopping online, monthly," he explains. "We find it cuts out all our impulse buys - things that added significantly to the bill but that we didn't really need. Then we top up with fresh ingredients from the butcher and the greengrocer."

The biggest impact on their household has been a rise in the cost of daycare - up from $250 a week in October to $270 now.

"There have been national funding cuts on daycare," Martin says. "And it's punitive. My wife knows one woman who had two children who just can't afford it. There's no point her working.

"You feel the effects of inflation increasing," he adds. "It's a general pressure on everyday life."

If the economy is forcing people to change, there also seems to be a subtle but persistent cultural shift in the way New Zealanders are shopping and thinking about food. And experts say it's not all driven by rising prices and increasingly frightening forecasts about the financial future.

In the relatively affluent Noughties, takeaway outlets and restaurants thrived and consumers who could afford to headed to the latest, most trendy eating house or bar. But today, couples and families
are staying at home to entertain friends, though the meals they prepare are unlikely to be the old cliche of "meat and two veg".

Murray Johnston, general manager of groceries for Countdown supermarkets, suggests two new trends are emerging. More people are buying supermarket home brands, which are better quality than they once were, and people will trade up to high end products if they can taste the difference. "One of these is beer," he says, "where the cheaper brand sales have had fairly flat sales but the more expensive brands have shown a growth."

At the same time, there has been a rise in sales of flour and cooking oils-indicating to Johnston that people are doing more home-baking and cooking.

"Much of the impact, we think, comes from the incredible popularity of TV shows such as Masterchef. So customers don't just buy rice now, they know which rice to use for different dishes and make their choices based on price and quality accordingly.

"Because of those shows they also seem more prepared to experiment with products like haloumi and pasta-which have had a very low sales base in New Zealand compared with other Western countries but are now steadily growing."

That's backed up by Eric Morgan, 55, and his wife and business partner Sonya Oyston, 41, who own Auckland cooking school Main Course.

The company is offering 10 per cent more courses to the public this year, and Morgan says they're booked out.

"Our clients tend to be people with good disposable income but they've commented on the rising cost of food and restaurants, and I think we're seeing a resurgence in the popularity of cooking at home," he explains. "Clients have told us they used to go out with their families on the eight to 10 public holidays each year, but they say they've cut back on that because of the surcharges.

"Now the price of lamb has gone through the roof-we've lost three quarters of our lambstocks through poor weather on the farms last year - and other food continues to go up in price."

Back at Reduced to Clear, Hills is leaving his Manukau store as it fills with customers at one of its busiest periods-midday on a Thursday. He's off to source new product. "When we started it was a clearance store for Cadbury's and we focused mainly on chocolate," he says. "But the more prices go up the wider our audience becomes and the wider our range will become. "It's clearly what people want."

Kiwis trim their budgets to make ends meet.

Anne Franklin, 71, lives with her husband John, 75, on the Coromandel. She is retired, with four adult children. "I've given up expensive cuts of meat, and most magazines. We never use the car in a casual way because of the high petrol costs," she says.

"But it was humiliating for me last year when I needed more than $1000 of dental work and had to have a WINZ loan. I also save up medical issues, only seeing the doctor two or three times a year, because that's gone up too."

Pita McKeown, 23, from Tauranga. Lives in a rental house with full board. "I was studying as a beautician, but I had to stop because of the rising cost of living. Petrol went up, my parking alone was $39 a week, and my rent went up from$180 to $200. I just couldn't sustain it. I've sold a lot of my valuable things on TradeMe to help make ends meet. Now I'm still looking for a job and I've got nothing left."

Edward Russell, 70, of Auckland, is an inventor and single parent to his daughters aged 12 and 15.

"We have given up many things because we don't even have enough food to live on. I get $19,000 - and that has been only for the past year. Rising prices mean the cost of the girls' education and uniforms in the first five weeks this year already exceeded what I spent last year. If it wasn't for the kindness of friends I don't know how we'd survive."

Vivienne Kempthorne, 60, is divorced with two adult children. She lives on the North Shore. "My sister lives in Australia and was over at Christmas and couldn't get over it. Things are much cheaper there and I am thinking about moving," she says.

"I can't afford new clothes, never travel or go on holiday now and my grocery shopping is driven by what's on special. I never use the heater-it's too expensive to run."

Lorraine McDonald, 69, lives with her husband and two dogs in Drury.

"I've cut back on food because petrol is so expensive. I like to walk for my health from Drury to Sylvia Park but I drive to the walking group and I might have to stop that because of the cost of petrol. Rising costs are stinging everybody."

Lorraine Coslett, 65, lives in Manukau with her husband Neville, 68.They have three children and three grandchildren, but are still working.

"We have given up SkyTV, $20 Christmas presents, and celebrate all occasions at home with guests bringing a plate and BYO. Last year we took two boarders, one from New Zealand and one foreign student. It's helped a little but not much. When we get the power bill we've used less, but it's cost more. It seems to be the same with everything.

"And people our age are caught at both ends-we have a son-in-law who lost his job five times last year and we helped out, of course. But I also have a 100-year-old father in a rest home whom I take out once a week."

Maria Brooke, 70, and her husband Gordon, 76, are living in Auckland. They each have four children and now have 20 grandchildren between them.

"We used to dine out in restaurants, but when you get a piece of fish you could buy for $6 and it's $35-and that's with no vegetables - it's ridiculous," she says. "We don't dine out now-unless someone else pays.

"The price rises have been a gradual thing. But the past six months have been terrible. We love cheese but we think twice about making a cheese sandwich. And we go to special vegetable stores to get fresher, cheaper vegetables. We were both brought up to be economical but the way things are going it's hard to keep up."

Ivan Hewlett, 74, is married to Alison, 70. The Tauranga couple are retired, though Alison works one day a week in a care home. They have four children and seven grandchildren.

"Last year I had to pay $3500 for a cataract operation on my right eye and an extra $600 for spectacles as I didn't qualify for hospital treatment. Without this operation I wouldn't qualify to drive. I need my left eye doing too but, because of the cost, I'll wait for that one for another year or two. It does irritate me to think that if I was in Australia all this would be done for free. We are finding life difficult at the moment."