My price-rise radar is going off
Have you noticed the cost of goods and services rising? When my favourite exercise class jumped in price from $20 a casual session before lockdown to $25, my pricerise radar switched on.
I’ve seen Kiwis complaining on personal finance related forums about the cost of goods and services being hiked due to Covid-19.
There’s more to this than meets the eye, says Jarrod Kerr, chief economist at Kiwibank.
In fact the Consumer Price Index shows many things are cheaper now, such as petrol.
Likewise, apart from seasonal items such as vegetables, supermarket prices are remaining stable. We’re just super-sensitive to any price rises thanks to the current economic climate, says Kerr.
As someone who notices prices at the best of times I started to do some research into my own spending. I’d seen a release as well from PriceSpy, the price comparison website, which found that prices in many categories had increased in level 1 lockdown.
Price increases affect people differently, however, and a 25 per cent rise in the price of a single exercise class is meaningless to most people.
Next I saw that many customers have had a thing or two to say about price rises at McDonald’s.
One example was that the Take on the Morning deal had jumped from $5 before lockdown to $7. This is one of many, I learnt.
Out of interest, I looked back at the items I’d bought on AliExpress (shamefully) in the three months before we first heard of Covid-19. What had cost me $75.35 then, was now $97.30, before the GST which, thanks to our government, we now pay. That’s a 29 per cent increase. Not scientific of course.
I’ve had to buy electronic equipment since lockdown and monitors, laptops, keyboards, multifunction printers and webcams are all up between 5 and 25 per cent compared to March 1, according to research by PriceSpy. That of course is, in part, due to the demand from people who needed to set up home offices.
I asked PriceSpy to run the numbers up until July 9 on some areas of spending that hadn’t hit the headlines. Fashion and accessories are up 2.77 per cent since March 1, sports and outdoors 2.66 per cent, barbecues 5.7 per cent, TVs 8.59 per cent, vacuum cleaners 8.19 per cent and washing machines 6.18 per cent.
Counter that, says Kerr, with retail discounting. “The Briscoes sale never ends, but it was even bigger [lately].”
Personally, I’ve been following sofa prices and many of the big retailers are falling all over themselves to offer lower prices.
There is virtually nothing at these stores that you really can’t live without. Basic groceries, however, are essential. It turns out that food prices haven’t changed much, if at all in many cases, since before lockdown.
I flew back into New Zealand on March 4 and did a massive supermarket shop the same day. I compared every single price this week and to be honest most of them were the same. The occasional thing such as Vitasoy oat milk and Pams streaky bacon were more expensive now, but then the dairy products I’d bought are now cheaper.
Do expect some weird stuff with pricing over the next few months. Some goods may simply not be available thanks to supply chain issues. Kerr went shopping for climbing shoes, for example, and was told he’d have to wait four months. Luckily he found another store that still had stock. I’ve found more than a few items missing from the shelves. If they remain in short supply, economics 101 suggests we’ll be paying more for them when they reappear.
There are ways to counter whatever price rises you face. If you’re attuned to what you’re spending you can shop around, desist or delay if you think a lack of supply is driving prices up.
I find personally if I put off buying whatever it is, the desire to buy wanes.
When it comes to food, look for substitutes, says Statistics New Zealand consumer prices manager Sarah Johnson. For courgettes, which have reached up to $20 per kg lately, that could be eggplant, pumpkin or even cabbage, she says.