Cold reality of rising bills to hit soon

Brace yourselves – the four horsemen of a grim winter of rising bills are on their way, experts warn.

Rates, power, food and petrol – things that most of us have to pay for in some way or other – are all set to increase in price in the next few months due largely to a mix of the upcoming GST rise and the introduction of the emissions trading scheme.

Add to that an expected rise in the official cash rate next week and the possibility of a drop in the New Zealand dollar and you can expect to see your weekly wage whittled away before you get the promised October 1 tax cuts.

ASB chief economist Nick Tuffley said from July 1 the ETS will kick in and consumers will almost automatically see price rises in petrol and power – and that's not taking into account any other fluctuations.

"The ETS is a given – putting all other things aside – that is going to have an impact on petrol prices. As for electricity prices, we have already started to see some retailers announcing price increases and putting the ETS down as the reason for that."

Petrol is expected to rise about 6c a litre with the ETS and a further 7c with GST. Power is expected to increase by 1.5% per unit of power, which could see bill rises of up to, or more than, $5 a week.

The ETS is a government-imposed tax on all electricity and gas production that emits greenhouse gases – a cost that is passed on to consumers.

GST will be the next major kick in the guts, albeit with a tax cut package that is likely to absorb much of the increase.

Tuffley said the GST rise, which takes effect on October 1 the same day as tax cuts, would affect "virtually every goods and service that households buy" with only things such as rents left unscathed.

The impact of GST on the household grocery bill for example is an expected 2.02% increase – so for a household that spends an average $176 a week, their bill will cost closer to $180.

Dairy prices in particular are expected to increase because of a forecast increase in payouts to farmers next season. Milk prices are expected to increase by about 10c a litre.

Tuffley said local authority rate increases were an annual affair, which usually occurred between July and September and could be as much as 9%.

Some councils try to keep rate increases in line with inflation, but in Wellington and Dunedin, for example, residential rates will increase by about 5.5% this year.

Tuffley said generally rents were not affected by rates increases because property owners were largely dictated to by market demand.

Shirley Woodrow, executive officer of Dunedin Budget Advisory, said lower-income families who would get only a small tax break would be the ones who would struggle with rise in costs.

"Food prices keep going up anyway – even before GST, they are constantly going up. Petrol fluctuates, but it's still so much higher than it was a couple of years ago. And already many people have been notified of electricity increases because of the ETS."

Tuffley said he expected to see a rise in the OCR on Thursday with the only possible reason for delay being concerns over instability in Europe. There was a potential for the New Zealand dollar to creep up over the year, but it was expected when the big economies in Europe started to strengthen our dollar would drop.

MONEY-SAVING TIPS

Stick to your shopping list, go shopping when you are full, try to visit the supermarket only once a week.

To save fuel, turn off your airconditioners and demisters when they have done their job, avoid heavy braking and acceleration, if you're idling for more than 30 seconds switch your engine off.

Save power by turning off electrical products at the wall after use, turning off lights, using cold washes, fixing leaking taps.

- © Fairfax NZ News