Price hikes put pinch on households

Far North young gardener Nevaeh Davis-Mahoney is proud of her first kumara growing achievements.Photo/Petrina Hodgson

Cash-strapped Northlanders are being urged to grow their own vegetables as new statistics show a surprise jump in inflation.

Price increases during the past three months have economists predicting the Reserve Bank could hike interest rates as soon as next week, adding even more to Kiwis' cost of living.

The consumers price index (CPI) rose 0.1 per cent in the December 2013 quarter, despite Reserve Bank predictions prices would drop.

The quarter saw significant hikes in air fares and dairy products, partly offset by drops in vegetable and petrol prices.

Whangarei Budgeting Services service manager Maureen Gwillim said clients felt the pinch when prices went up.

"Our major concern is that [clients] aren't buying food for their families because they have got to pay their power bill ... it's a huge problem."

The service had seen a recent surge in clients, partly attributed to last year's Work and Income changes, she said.

"The cost of items is an ongoing problem, [so] we're educating people to go back to basics."

Mrs Gwillim said the service often advised clients to grow their own vegetables in an effort to counter price hikes and put healthy food on the table.

Inflation increased 1.6 per cent in the 2013 year, the highest annual rise since early 2012, Statistics New Zealand said last week.

International air fares jumped 12 per cent in the December quarter, while holiday packages rose 7.3 per cent.

Prices for housing and household utilities rose 0.5 per cent, while milk, cheese and egg prices jumped 4.2 per cent, the highest quarterly rise since September 2010.

However, these spikes were partly offset by a significant fall (20 per cent) in vegetable prices, particularly tomatoes, lettuce, and cucumber, which dropped about 50 per cent. Petrol prices fell 3.5 per cent.