In Auckland a widower considers selling his home to get by; in Whakatane a mature student moves back in with his parents because he can’t afford to rent; in Wellington an early childhood teacher goes without food to pay the bills.
As living costs balloon in New Zealand, so too are the sacrifices its citizens are making.
Inflation in Aotearoa has hit a three-decade high, driven by an increase in petrol and housing costs. It is showing no sign of slowing – inflation hit 5.9% at the end of 2021, and ANZ, the country’s biggest bank, expects it to continue rising in 2022. The cost of living has grown by 5.2% for the average household within a year.
“Everything is rising: groceries, a coffee at the local cafe, a burger at the wee pub down the road ($21), a car service at the local garage, a haircut,” says Wellingtonian Pal Andre Ricard, 49.
“Putting living basic costs aside, the cost of rent and buying a house is off the rails … and wages are staying the same.”
Walk into any supermarket and the prices of basic items can be eye-watering. For $100 you will get: a dozen eggs, a carton of milk, a loaf of bread, a block of cheese, a head of lettuce, a block of butter, a chicken, a bottle of wine and a box of nappies.
Last week, in a blow to brassica lovers, cauliflowers were priced at a $15 a piece. Annual food prices have had the biggest increase since 2011, with a 4.5% spike between December 2020-2021.
“The cost of groceries have risen quite rapidly,” Auckland resident Jijo James says.
James, 28, says he used to pay $100 for a typical grocery shop before Covid-19 lockdowns, but a similar bundle now costs between $180 and $200. “I have stuck to buying only essential items and cut down on extra expenses,” he says.
Bills like internet and electricity have also increased, James says. “But my income has remained the same, making it harder to save up for any potential emergencies. I went from being able to save some money every week to living pay cheque to pay cheque.”
Regulator reveals steps to improve competition
In a draft report last year, the Commerce Commission found New Zealand shoppers face some of the most expensive groceries in the OECD. The commission also found that profit margins at New Zealand supermarkets – which is dominated by a duopoly – were consistently higher than those of grocery chains internationally.
The two big supermarket companies – Foodstuffs and Woolworths NZ – dominate wholesaling and distribution, which creates difficulties for other businesses to get competitively priced wholesale supplies.
On Tuesday, the Commerce Commission revealed its final recommendations for what must be done to improve competition and affordability. It stopped short of breaking up the duopoly and forcing them to sell off some of their stores, opting instead for making more land available for new grocery stores by changing planning laws to free up sites.
The competition regulator also called for the big players to improve access to wholesale supplies and prices for smaller players, and recommended the creation of a grocery sector regulator and dispute resolution scheme to resolve wholesale and supplier disputes.
Anna Rawlings, chair of the Commerce Commission, said “competition in this sector is not working well for consumers”.
“We think that the best way to improve conditions for competition is to enable the entry and extension of others within the sector by freeing up land for development, and by providing some further wholesale access to grocery supply.”
The consumer affairs minister, David Clark, said the government would implement the recommendations. “New Zealanders are demonstratively paying too much in the checkout,” he said.
“If we’re not seeing material changes in the sector then we will consider other measures.”
Housing and rent surging
Groceries are not the only area where people are feeling the pinch. Housing affordability is at a record low, with the average property now worth 8.8 times the average household income, according to property analysts CoreLogic. For those households, it would take nearly 12 years to save enough money for a deposit.
Rent and household bills have also increased. Median rents nationwide have reached $540 a week, up by $50 from the previous year, while utilities rose 32% in the June 2021 quarter and petrol prices increased 30% in the year to December.
Melanie Watterson, a 31-year-old from Wellington who is studying full-time and working part-time as an early childhood teacher, says the living costs are “overwhelming”.
“To make sure I have power and household bills covered I’m left with very little, and often have to go without eating,” she says.
“Managing financially when I was working full-time was difficult and since becoming a student one year ago it has become unmanageable. It’s very overwhelming.”
When winter rolls around, those costs become “ten times harder”, she says. “Homes in New Zealand are often unhealthy, poorly insulated and have mould issues, so power bills end up being huge.”
For Joshua Mainwaring in Whakatane, his income could cover his rent but not much else. “I like so many thirtysomethings have caved and ended up back with my parents,” he says. “I have been planning to go to university in Wellington but the cost of rent is so high there that I’m having to take a year off first to save money towards my living costs.”
Even homeowners are struggling. Keith Marshall, a 74-year-old retiree and widower in Auckland, says he is of the generation that is “asset rich but cash poor”. His superannuation has increased marginally in the past few years, but not at a rate to match the rise in living costs.
“I am not talking about daily coffees, brunches, dining out, takeaway food, online streaming services or buying the latest thing to have on a credit card,” he says. “I can afford none of those things. My one social outing per week is to see a film at a senior citizen’s rate.”
Marshall monitors his spending thoroughly using spreadsheets but is still left with nothing at the end of the pay period. “Unfortunately, if this rate of inflation continues or grows, I cannot see how I can continue to live as I do now. What that may entail I dread to contemplate.”
Over the weekend, the National party promised to scrap the government’s tax policies to help soften the blow of increasing costs of living, which its leader Christopher Luxon called a “crisis”. “The average kiwi family is worse off than they were 12 months ago and the government needs to act.”
But the prime minister, Jacinda Ardern, rejected the idea that New Zealand was in a rising costs crisis, saying global pressures were leading to high prices, not government policies.
“Yes, these times are tough. We have seen the impact of inflation, but we have also seen people predict we’ll be coming out of that throughout this year. Things will start to get better and ease,” she told Newshub. “We are experiencing high inflation, as are many countries at the moment.”
