This and more amid inflation and rising cost of living
New Zealanders have been urged to spend carefully, budget, and save as living costs continue to spike.
Recent data showed the Consumers Price Index lifted by 7.2% in the year to the September quarter. This was well above Reserve Bank and market expectations of 6.4% and 6.5%. The cash rate, meanwhile, has been tipped to hit 5.25% from the current 3.5%.
Read more: Mortgage holders face more mortgage pain as interest rates rise – ANZ
With interest rates likely to rise by more than previously expected and with the increased risk of a “hard landing,” economists warned that Kiwis could be in for a challenging time, New Zealand Herald reported.
Despite the headwinds, there were no government plans to extend the temporary removal of fuel taxes, provide another iteration of the cost-of-living payment, or make income tax changes to support low-income earners, Finance Minister Grant Robertson said.
Read next: Wealthiest Kiwis hardest hit by fastest inflation
Pakanui Tuhura, Rotorua Budget Advisory Service manager, said putting food on the table would be where cost-of-living rises could hit hardest.
“At the moment, the main concern is about fuel costs and food costs,” Tuhura told the Rotorua Daily Post. “If the interest rates on developers' loans rise then there may come a spate of rental price increases as well.”
Tuhura’s first advice was to always seek professional financial advice.
“Come and see a budget adviser or financial mentor, even if you think you’ve got a handle on it,” he said. “It’s always good to have someone else there to use as a sounding board and to provide a third-party, unbiased opinion on how you're currently faring and how you could fare if prices keep going up.”
Tuhura said every person was different and financial advisers could give them advice according to their specific circumstances. He also recommended planning ahead.
“If you don't have a budget, get a budget, even if you do it yourself,” he said. “Then look at that budget and see if there are things you don't actually need to pay for.”
Tuhura also advised Kiwis to seek more work hours if they were in casual or part-time employment.
Murat Ungor, University of Otago department of economics senior lecturer, said low-income households especially should focus on survival for the next few months, New Zealand Herald reported.
“Inflation is going to be with us for a while,” Ungor said.
Ungor said the New Zealand economy is still feeling the effects of the spillover from “global shocks” caused by the Russia-Ukraine war and global supply chain issues worsened by China’s continued zero-COVID policy.
“One of the major price increases in New Zealand has been in the construction industry, where most materials are imported,” he said.
These uncertainties in global economics, Ungor said, influenced New Zealand’s inflation rate, which consequently impacted the prices of food, the rental market, and transport.
“In a low-income household, the majority of their income will go towards food, rent, and transport and if you see inflation in those categories then it is a very major problem for those people,” he said.
Ungor said Kiwis would need to use their money very carefully.
“We cannot have luxuries,” he said. “If as a family, you used to go out for a dinner twice, it will need to go down to once or not at all.”
Ungor urged Kiwis to spend carefully on essentials then save what was left over.
“The focus is on survival,” Ungor told New Zealand Herald.
