Higher cost of living expected

MATT STEWART AND SAM BOYER
Last updated 05:00 05/01/2013

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Kiwis who did it tough in 2012 will find no comfort over the next year as financial anxiety rises with the climbing cost of living.

A survey by The Dominion Post paints a gloomy picture for many households: two-thirds of respondents said the cost of living is becoming too high.

And that bleakly held view is backed by various experts, who confirm that prices are likely to climb further over the next 12 months.

The survey polled more than 600 readers and found rates, petrol, food and house prices all among the most pressing financial woes. Taxes, medical and dental expenses, and the exchange rate were also prime concerns.

But after a year in which electricity prices rose 4.4 per cent, power ranked as the number one burden, with 51 per cent saying household power bills hit them hardest in the pocket.

Domestic Energy Users Network analyst Molly Melhuish said electricity and gas bills would keep growing because the five state-owned power companies were being primed for sale.

Ever-rising electricity retail prices ensured ongoing profits would paint a rosier picture for potential buyers of state-owned power companies under the government's asset sales scheme.

"For 2013, my crystal ball says electricity prices will keep going up and that's because the Government wants to sell assets and wants prices to keep rising."

Yet wholesale prices should be falling because of a big electricity surplus, in turn pushing retail prices down, Mrs Melhuish said.

Federation of Wellington Progressive and Residents Associations president Tom Laws said rates were a constant worry.

"There's a concern about the fact that they [rates] are increasing faster than the rate of inflation.

"I think there's a general thinking [that] the council doesn't listen to its people . . . and that does appear to be true."

Many of the federation's members were also worried about the looming possibility of the super-city amalgamation.

"We've heard the savings that were promised in Auckland haven't materialised.

"If there was a super-city, then rates might go up."

Rates in Wellington are due to rise by 2.5 per cent in 2013, but Mayor Celia Wade-Brown insisted that they were value for money.

AA senior petrol price analyst Mark Stockdale said the best-case scenario for 2013 would be fuel prices remaining in line with those of 2012.

Ongoing recession would help keep fuel prices stable but if the economy improved internationally, prices at the pump could skyrocket as global demand outstripped supply.

"If the global economy remains in the doldrums, that should keep a lid on the prices. If the economy picks up, then prices will [increase] rather than drop."

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Government fuel taxes announced last month would also guarantee prices were pushed up by at least 9c over the next three years.

Housing was also a worry, with 28 per cent of respondents flagging the renting or purchase of property a concern.

Wellington Housing Trust director Alison Cadman, said demand for affordable housing had been going up.

"Wellington has some of the highest market rents in the country," she said.

The residential property market shows no signs of slowing either, with the national median house price now sitting at a new high of $383,250.

Labour MP Jacinda Ardern said the rising cost of living was a direct result of the National Government's failure to develop an economic plan.

"This survey shows the Government's failure is hitting Kiwis in the pocket with increases in GST, increases in fuel tax and price rises as the Government prepares assets for sale - and that's going to get worse, not better."

National MP Murray McCully said he was not surprised people were concerned about the cost of living, especially after four years of global economic crisis.

"The only solution is to improve our level of economic growth," he said.

"To make that possible it is important that the Government get its accounts back into surplus - a key goal of our current economic strategy."

NO FAT LEFT TO CUT IN BUDGET

Kilbirnie residents Lorraine and Rapata Clay worry about what they will have left in their budget to cut back on, if basic living costs continue to rise.

The couple both work but with fewer trucking jobs for Mr Clay and rising food, power and petrol prices they have had to extend their mortgage, cut back on phone, Sky and newspaper subscriptions, and squeeze every cent they can out of their weekly grocery shop.

"It's even bread and milk," said Mrs Clay, a childcare worker. "We've been walking down to The Warehouse for their specials. At the supermarket it's nearly six dollars for both."

The couple are unable to afford expenses such as dental work, and said if prices increased as expected in 2013, there would be harder decisions to be made.

They are animal lovers but have decided they will never get another pet as it is simply too expensive to care for them.

With two of their children in their 20s and two grandchildren living at home, Mrs Clay tries to help them out with any leftover funds she has.

They hope 2013 will be a better year - that there will be more work and that they can save more - but are resigned to the fact things are likely to just get tighter.

EKED OUT

Weekly family budget $550

Food $180
Mortgage $105
Rates $45
Power $45
Phone $25
Petrol $50
Left over $100

- The Dominion Post

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