Information released today by Statistics New Zealand showed that the cost of living increased by 4.7% last year, said CTU Economist Craig Renney. “This new data should reinforce the need for Government to support middle and low income families who have struggled with cost of living over the past few years,” said Craig Renney.
“Inflation was being driven by some costs that are hard to avoid for many. This includes rent (up 4.5%), household energy (up 5.9%) Local Authority rates (up 9.6%). Insurance prices were up 11.9% annually, driven by 23% increases in dwelling and contents insurance, and 16.5% increases in vehicle insurance. Food prices fell quarterly, but are still 5.7% higher than a year ago – with bread, fruit, and groceries price increases all outpacing general inflation.
“We have not yet seen an anouncement on the Minimum Wage from the government, despite that normally happening in December. The Minimum Wage needs to increase by at least the cost of living to make sure that those on that wage don’t fall further behind.”Inflation is at its lowest rate for two years, and quarterly inflation is at 0.5%. This means that inflation over the past three months has been within the Reserve Bank target rate, reducing pressure on the Reserve Bank. New Zealand now has inflation below the OECD average of 5.4%, and around the same at that found in Australia at 4.7%.
“Inflation has also fallen from 7.2% to 4.7% without significant cuts to government spending, and on a quarterly basis is now within the the target range. Inflation doesn’t appear to have been driven by government spending in any significant way. Promises to reduce current inflation by cutting public spending should be treated with a high degree of caution. Instead those cuts will simply hurt those who use those services, with little or negative economic benefit overall,” said Renney.
