Price inflation highest on low income
Hurunui woman Natalie Absalom has just received a job offer, after being on a benefit for two years.
She says, over those years, the financial stress was relentless. ‘‘Every time petrol goes up I want to cry because [the cost of that] has to come from somewhere else.’’
Food shopping and filling up her vehicle had to wait when she struggled to make sure she had enough to pay the mortgage, or the power bill.
There have been times when she could not afford to get her two sons, aged 10 and 15, to school.
‘‘I could not afford to cut back on food any further and even if I do have enough petrol, do I have enough money for lunches?’’
Many times, friends have dipped into their own pockets to buy food for her family.
‘‘They’ve ordered me groceries, sent me money, deposited money into my account and paid my garage bill. That’s great but that’s what taxation should have done.’’
Absalom said, even though she now has a job to go to, she was worried about getting through the first few weeks between when her benefit was cut and her pay started coming in. ‘‘There is no fat in the system.’’
New data from Statistics New Zealand shows that higher prices for housing, household utilities and food are hitting beneficiaries hardest, while overall prices are dropping for top earners.
Beneficiaries experienced the highest inflation of all groups for the second quarter in a row in June. Their overall costs rose 0.3 per cent in the June 2017 quarter.
In contrast, the highest-earning group saw their cost of living fall 0.1 per cent.
‘‘Rising prices for the basics such as rent, electricity, and food had a greater impact on beneficiaries,’’ Statistics NZ prices senior manager Jason Attewell said.
‘‘Over half their spending was on these essentials, compared with about a quarter for the highest earners.’’
Green Party co-leader Metiria Turei said it was a problem.
"People just don't have enough money. It's not about budgeting." Greens co-leader Metiria Turei
‘‘People just don’t have enough money. It’s not about budgeting or wasting money, they just don’t have enough.’’
Ministry for Social Development data showed $70 million had been spent on hardship grants in the past quarter, mostly to help with food and power bills.
Turei said that showed that the Government was already having to pay more than was offered by the basic benefit, but people had more hurdles to access it.
Statistics NZ’s data comes from the household living-costs price indexes (HLPIs), which are different from the overall basket of inflation measured by the consumer price index (CPI).
The HLPIs offer insights into how price changes affect 13 different household groups, including beneficiaries, Maori, superannuitants, and 10 other groups that have varying income and spending patterns. This differs from the CPI, which is a national average of price changes that New Zealand households experience.
In the June 2017 quarter, higher prices for vegetables and electricity had a large effect on all groups. This was countered by lower prices for petrol.
‘‘Items such as tomatoes and petrol are commonly purchased by households of all income and expenditure levels, and the impact of large price rises for these goods can be seen across the board,’’ Attewell said.
‘‘In contrast, domestic airfares fell 15 per cent across HLPI groups. High spenders benefited the most from cheaper domestic airfares.’’
Living costs for high-spending households rose the least in the year to June 2017, up 1.4 per cent compared with 2 per cent for lowspending households.
High spending households spent proportionally more on hitech items.