Living costs in focus in upcoming New Zealand elections

As a result of inflation being at its highest level in three decades and a protracted stretch of interest rate hikes, the steadily increasing cost of living has emerged as one of the most important issues that voters will be deciding on in New Zealand’s next election in October.

The once-weekly treat of ordering takeout for supper became biweekly, then monthly. There would be fewer outings to the cinema. Also on the agenda were visits to the dentist and salads.

Anum Najif, age 35, has found that each trip to the store has been “more difficult than the one before” over the course of the past six months. The monthly power bills are “shocking.” She goes on to say that the subject of rent is “the kind of topic where I really don’t know what to do or how to manage it any more.”

Anxiety about rising costs of food, housing, and fuel has contributed, at least in part, to a decline in support for the government party, Labour, and has caused other political parties to hustle to convince voters that they could give relief from these burdens.

Both of the major parties have strengthened their previous stances, with the centrist-right National Party favoring tax cuts for what it refers to as the “squeezed middle” and the left-leaning Labour Party vowing to support cost-easing measures, such as those regarding fruit and vegetables.

According to industry analysts, the rising cost of living has evolved into a primary concern because it now affects a wider demographic of people than it did in the past. Najif, a mother of two from Lower Hutt who works an office job as well as consultancy projects, is typical of the voter that parties are competing to impress. These voters are the ones who are having difficulty making ends meet on salaries that were once sufficient.

Inflation is always a terrible problem particularly for people who are poor,” says Shamubeel Eaqub, an economist based in Auckland. “However, over the past few years, it has affected a much larger group of people who in the past would have been considered to be middle class and who are now being forced to make cuts.”

In a political survey conducted by Essential New Zealand earlier this month, ninety percent of respondents identified lowering living costs as either somewhat or extremely important, placing it higher on their priority list than any other topic. More than half of those surveyed reported that they were “struggling” or “in seriously difficult difficulty” paying their bills.

According to Eaqub, households in the middle class were regularly putting away between NZ$100 and NZ$150 ($59 to $88; £47-71) every week prior to increases in inflation and interest rates. Now, many people are contending with shortages.

“We’re dipping into our savings most weeks at the supermarket checkout,” says Richard Bell, 30, a public servant who lives in Wellington with his wife, who is a teacher and is on maternity leave, and their three-month-old baby. Richard works for the government, and his wife is on leave from her job as a teacher.

According to Stats NZ, the cost of maintaining a standard of living for a household in New Zealand increased by 7.2% in the year leading up to June. The increases seen in the previous year are the ones that have been recorded as being the largest since the late 1980s. The agency reported this month that the pace of inflation is decreasing, although the most recent numbers included a 10.6% increase in the price of supermarket items. This increase was led by a 5.4% surge in the price of fruit and vegetables, which was a smaller rise than the 21.2% increase recorded in June.

“We’re definitely eating less vegetables,” explains Bell. “It’s a trend.” When I go to the grocery store from now on, I will be asking myself if it is absolutely necessary to include capsicum in the stir-fry.

Before the most recent bout of inflation, goods such as groceries were already more expensive in New Zealand than they were in the neighboring country of Australia. This was in part due to a supermarket duopoly and the country’s reliance on global supply chains. While living cost crises are befuddling nations all over the world, the situation in New Zealand has some distinctive characteristics.

After a housing boom that reached its pinnacle in 2021 – during which values skyrocketed and interest rates were historically low – many people in New Zealand found themselves in the unenviable position of having precariously large mortgages as rates began to climb and the cost of houses began to fall.

According to CoreLogic, the average value of a home in June was 7.2 times the average income of a household, with mortgage payments accounting for 49% of the average household’s income. Both figures were lower than their respective heights, but analysts such as Eaqub warn that they are still unmanageable for many people. According to data obtained from the website for conducting business known as TradeMe, the median weekly rent in New Zealand reached a new high of NZ$620 in the month of June.

When Bell moved into the public sector from the private sector, his income more than doubled. As a result, he is concerned about how families who have less are managing their lives.

Murray Edridge, the head of the Wellington City Mission, stated in an interview with Newshub in May that the demand for the organization’s services had increased by a factor of three. Edridge referred to this current year as “the hardest year that most people have ever seen.”

This week, Labour and National argued back and forth over how quickly things were expected to turn around for the better. Inflation, which is currently at 6%, which is higher than in comparable countries, is expected to revert to its goal zone of 1-3% by the end of next year, according to a pre-election economic and fiscal update from the Treasury that defied the worst expectations. This was touted by Labour as evidence that pressures were easing.

Grant Robertson, the minister of finance, stated that “we have turned that corner,” and he added that wage growth would outpace the decline in inflation. “We are there,”

But the leader of National, Christopher Luxon, stated that the results indicated a “slow, anaemic” slog out of the country’s technical recession.

Meanwhile, according to Najif, it is becoming increasingly difficult to pay the bills.

She says, “I get paid on Tuesday, and I’ll make sure I have enough bread and milk to last me for two weeks because by the start of next week, I’ll be clutching at pennies to get through.” “I get paid on Tuesday, and I’ll make sure I have enough bread and milk to last me for two weeks.”

Apples and bananas are the only fruits she can afford, and muesli bars have been eliminated from her shopping list. The harried single mother is now responsible for preparing each and every component of her children’s lunches at home. It’s not very common to have red meat for dinner.

It has been suggested to Najif that her children, ages 10 and 12, require braces; nevertheless, she asserts that this will not occur. The children get dental checkups at school, but Najif herself considers the dentist to be “a no-go zone” because of the living cost. According to her, during the course of the past half year, six of her friends have emigrated to Australia in search of better job opportunities, as well as cheaper rent and grocery prices.

According to research conducted before the election, voters are willing to punish Labour, which has governed New Zealand since 2017 and is responsible for the current difficulties. In addition to the policies that have already been revealed this year, such as doing away with fees for prescription medications, the party has promised a package of measures, one of which is the elimination of taxes on fresh fruits and vegetables, as well as the expansion of free dental treatment to cover those under the age of 30.

The center-right opposition party, National, is putting a strong emphasis on tax reductions. Additionally, the party’s platform includes measures to lower prices for landlords and employers as well as reductions in overall government spending.

The libertarian Act party supports eliminating tariffs and regulations in order to reduce the cost of living, in contrast to the left-leaning Green party and Te Pti Mori, which have both pledged to enact radical tax reforms that will be funded by a wealth tax.

Eaqub, the economist, had some negative things to say about the parties’ plans for the cost of living. “You’re not going to be able to solve a global inflation problem with local solutions,” he added. “It’s just not going to work.”

“Do we have an economy that is competitive, markets that are competitive, and a competition authority that is really strong and powerful?

“The answer is that we don’t, but that stuff is not sexy, and it’s not going to win you any votes,” she said.

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