Hana Seddon from Corps Officer Rotorua Salvation Army. 25 November, 2022. Rotorua Daily Post photograph by Mead Norton
Hana Seddon from Corps Officer Rotorua Salvation Army. 25 November, 2022. Rotorua Daily Post photograph by Mead Norton
The rising cost of living is hitting Kiwis hard. Today, NZME - publisher of the Rotorua Daily Post and NZ Herald - is broadening its coverage of the cost-of-living crisis. We will look at how skyrocketing costs are impacting us all and seek advice from experts and locals on how to manage your finances through these tough times.
Some Rotorua families are struggling to put food on the table as food prices soar at the highest rate in more than 30 years.
With rents and mortgage interest rates also rising, and the cost of living increasing faster than the average wage in 2022, the Herald Price Tracker has been launched online today in a bid to guide and inform New Zealanders through these tough times.
The digital tracker looks at the price variations of different items and the average living costs of different households in New Zealand.
In the year to December 2022, the cost of living increased by 8.2 per cent while the net average wage rose by 6.24 per cent. Bay of Plenty median rents also reached an all-time high of $615 in January, but tenants are now more worried about putting food on the table than paying for a roof over their heads.
A budget advisory service says as a result of these costs some of its clients “often have nothing left for food” and a local foodbank says the number of people seeking help has doubled.
According to figures released by Stats NZ this month, food prices increased by 12 per cent over the past 12 months – the largest annual increase since 1989.
Stats NZ’s consumer prices manager James Mitchell said barn or cage-raised eggs, potato chips, and cheddar cheese “were the largest drivers” of price increases.
Mitchell said higher prices for food, housing and transport were the main financial pressure points for households.
For beneficiary households, inflation increased 6.9 per cent driven mainly by higher rents, interest payments, groceries and fruit and vegetables.
Rent made up about a third of beneficiary household expenditure compared with 13 per cent for the average household and 5 per cent for the highest-spending households.
Meanwhile, for the lowest-spending households, inflation increased 7.1 per cent.
“The rising cost of household staples such as eggs, meat, vegetables, toilet paper, etc. is more troubling to them than the rising cost of things such as ice cream, lollies, cosmetics etc.
“As the cost of power rises some are moving away from bulk buying frozen foods - requiring a freezer to keep - [to] smaller orders of canned and shelf storage foods.
“Many are reducing their food budgets and ... starting to seek food grants and parcels.”
Rotorua Budget Advisory Services manager Pakanui Tuhura. Photo / Andrew Warner
Rotorua Salvation Army corps officer Hana Seddon said anecdotally the number of people it supported had “doubled” in the year to January with “a steady increase due to the cost of living”.
“There’s been at least a 30 per cent increase in people who are over 65 that we usually wouldn’t see coming in for food support because they’re pretty self-sufficient.
Rotorua Salvation Army corps officer Hanna Seddon. Photo / Mead Norton
TradeMe figures showed the median rental price in the Bay of Plenty in January was $615 - 6 per cent higher than 12 months earlier.
However, Consumer NZ says a recent survey showed most renters were more concerned about putting food on the table than paying for a roof over their heads.
Food had gone from being the eighth-highest financial concern among New Zealanders in June 2021, to now the second-biggest concern after mortgage payments and before rent.
“Food concerns have been steadily creeping up over the last 18 months – but this is the first time we’ve seen food worries outstrip housing (rents),” Consumer NZ head of research and advocacy Gemma Rasmussen said.
“With colder months ahead, many households are bracing for higher energy costs as well as pricier food bills.
“Nearly half (45 per cent) of households are planning to set aside more money for groceries as costs increase, compared to June 2021, when one in four households set aside additional funds.”
Craigs Investment Partners investment director Mark Lister said a number of factors were causing the cost of living to increase and bringing inflation under control would not be pleasant.
Inflation, the main way the cost of living was measured, was running at 7.2 per cent — close to the highest in about 30 years.
Inflation is the increase in the level of prices of goods and services households buy and is measured as the rate of change of those prices.
Lister said there were a few reasons inflation was so high.
One was the Covid-19 pandemic and its hangover that has caused goods shortages, logistical constraints and supply challenges that made getting things to and from other parts of the world harder, slower and more expensive to ship.
Mark Lister is the investment director at Craigs Investment Partners. Photo / Supplied
Another was the strong economy fuelled by the economic boom caused by the stimulus from the Government and central banks like low-interest rates, money printing, and quantitative easing during the virus response.
The tight labour market combined with full employment meant wage growth was skyrocketing and when wages were growing strongly inflation was fuelled more broadly.
“All of that put together has forced the cost-of-living challenges,” Lister said. “That’s kind of where things are at.
“The high inflation is partly driven by the pandemic and supply challenges, it’s partly a hangover from all the zero interest rates and partly the negative that comes with a booming economy and labour market.
“The way you get inflation under control is you crank up interest rates and you basically make the economy, which is running a little too hot, you knock it on the head — you basically cause pain.”
