Source: MakeLemonade.nz
Te Whanganui-a-Tara – When it comes to costs of living, few items matter as much to households as the prices they pay for food and the price they pay for rent.
When it comes to costs of living, few items matter as much to households as the prices they pay for food and the price they pay for rent. Unless a household can afford to buy their own house, these items are non-negotiable can cannot be substituted.
Food price increases are inescapable. They are a major burden for low income households.
The cost of living is going up faster than before, which sets a concerning tone for the year ahead, Wellington social economist company Berl says.
The price for food increased by 2.7 percent December 2021 to January 2022. Fruit and vegetable prices increased by 9.9 percent from December 2021, and Meat, poultry and fish increased by 3.6 percent.
Fruit and vegetable prices typically increase seasonally, so when seasonal increase is adjusted for, the increase is still significant at six percent. Looking at annual data the increase over the last year is concerning as we can see the largest annual increase in food prices in the last three years.
Rent prices started being measured on the last quarter of 2006 and they have been steadily increasing at more-or-less the same rate since 2011.
On the other hand, food prices fluctuate seasonally but generally increase in the long term. The CPI goes through sharp increases followed by lull periods, and appears to be sharply increasing in recent quarters, likely aided by the significant increases in fuel prices in the last year.
Clearly, rent prices have been steadily outrunning other costs of living for quite some time. Renters throughout the country are already painfully aware of this. Unfortunately, other costs of living appear to be closing this gap.
Rent prices have been steadily outrunning other costs of living for quite some time.
The effects of the pandemic are in full swing, and the effects of inflation, the housing market boom and international food logistic issues are all taking their toll on New Zealand households.
Renters who are excluded from rocketing housing capital increases are paying the price through ever increasing rents.
Those with stagnant wages are undoubtedly paying more now to live than before in the last couple of decades and will be saving less. Lower income households will be hurt the most, as they have little to no disposable income to protect themselves from such surges.
Higher income households may weather the storm and will be affected even less if they own their own home. Rent controls are off the table for the meantime, but these increases suggest that costs of living are showing no signs of easing.
