Cost of living: Rising costs hitting Tauranga families hard. Some have ‘nothing left for food’

The rising cost of living is hitting Kiwis hard. Today, NZME - publisher of the Bay of Plenty Times and NZ Herald - is broadening its coverage of the cost-of-living crisis. We will look at how skyrocketing costs are impacting us and seek advice from experts and locals on how to manage your finances through these tough times.

Some families are struggling to put food on the table as food prices soar at the highest rate in more than 30 years.

Rents and mortgage interest rates are also rising and the cost of living increasing faster than the average wage in 2022. In a bid to guide and inform New Zealanders through these tough times, the Herald Price Tracker has been launched online today.

The tracker looks at the price variations of different items and the average living costs of different households in New Zealand and makes data accessible.

In the year to December, the cost of living increased by 8.2 per cent while the net average wage rose by 6.24 per cent. Bay of Plenty median rents also reached an all-time high of $615 in January and tenants are now more worried about putting food on the table than paying for a roof over their heads.

A budget advisory service says some of its clients “often have nothing left for food” and a local foodbank says there has been a 30 per cent increase in the number of people seeking help.

According to figures released by Stats NZ earlier this month, food prices increased by 12 per cent over the past 12 months – the largest increase since 1989.

Stats NZ’s consumer prices manager James Mitchell said barn or cage-raised eggs, potato chips, and cheddar cheese “were the largest drivers” of price increases.

Mitchell said higher prices for food, housing and transport were the main financial pressure points for households.

For beneficiary households, inflation increased 6.9 per cent - driven mainly by higher rents, interest payments, groceries and fruit and vegetables.

Rent made up about a third of beneficiary household expenditure compared with 13 per cent for the average household and 5 per cent for the highest-spending households.

Meanwhile, for the lowest-spending households, inflation increased 7.1 per cent.

One person affected by rising prices was Tauranga mum Chanchal Saraswat who told the Bay of Plenty Times she saved money in her weekly shop by buying seasonal vegetables, buying in bulk and sharing with others.

Bay Financial Mentors manager Shirley McCombe said clients were falling behind on rent, power and phone bills, and making loan payments as a result of the increased costs.

“People are constantly having to decide where to put their money. Often, they spend and have nothing left for food.

“If you were to look at what a person receives on a basic benefit or superannuation, plus the maximum they can receive for accommodation allowance, you will see that it is incredibly difficult to cover the cost of living.”

McCombe encouraged people to “prioritise” their spending with accommodation, electricity and food at the top of the list, and set a clear budget each week.

Bay Financial Mentors manager Shirley McCombe. Photo / Supplied

Tauranga Community Foodbank manager Nicki Goodwin said soaring food prices were hitting the service on two fronts.

There had been a 30 to 40 per cent increase in demand for food parcels as well as a 30 per cent increase in the cost of food supplies.

“That’s having a huge impact.

“Purchasing has gone up substantially, especially anything fresh like meat, and eggs. Things we purchase so we can provide nutritious balanced food support. We’ve really felt it.

“Whatever the community is going through has a direct impact on us as well.”

Goodwin said despite the increases it was keeping up because “that’s what we’re here for ... and we’re always available for the community”.

Tauranga Community Foodbank manager Nicki Goodwin. Photo / Mead Norton

TradeMe figures showed the median rental price in the Bay of Plenty in January was $615 - 6 per cent higher than 12 months earlier.

However, Consumer NZ says a recent survey showed most renters were more concerned about putting food on the table than paying for a roof over their heads.

Food had gone from being the eighth-highest financial concern among New Zealanders in June 2021, to now the second-biggest concern after mortgage payments and before rent.

“Food concerns have been steadily creeping up over the last 18 months – but this is the first time we’ve seen food worries outstrip housing (rents),” Consumer NZ head of research and advocacy Gemma Rasmussen said.

“With colder months ahead, many households are bracing for higher energy costs as well as pricier food bills.

“Nearly half (45 per cent) of households are planning to set aside more money for groceries as costs increase, compared to June 2021, when one in four households set aside additional funds.”

Craigs Investment Partners investment director Mark Lister said a number of factors were causing the cost of living to increase and bringing inflation under control would not be pleasant.

Inflation, the main way the cost of living was measured, was running at 7.2 per cent — the highest in about 30 years.

Inflation is the increase in the level of prices of goods and services households buy and is measured as the rate of change of those prices.

Lister said there were a few reasons inflation was so high.

One was the Covid-19 pandemic and its hangover that has caused goods shortages, logistical constraints and supply challenges that made getting things to and from other parts of the world harder, slower and more expensive to ship.

Mark Lister is the investment director at Craigs Investment Partners. Photo / Supplied

Another was the strong economy fuelled by the economic boom caused by the stimulus from the Government and central banks like low-interest rates, money printing, and quantitative easing during the virus response.

The tight labour market combined with full employment meant wage growth was skyrocketing and when wages were growing strongly inflation was fuelled more broadly.

“All of that put together has forced the cost-of-living challenges,” Lister said.

“That’s kind of where things are at,’' he said.

“The high inflation is partly driven by the pandemic and supply challenges, it’s partly a hangover from all the zero interest rates and partly the negative that comes with a booming economy and labour market.

“The way you get inflation under control is you crank up interest rates and you basically make the economy, which is running a little too hot, you knock it on the head — you basically cause pain.”