“The rise in the Consumer Price Index for the three months to December is about what was expected at 0.4 percent but it is more than meets the eye”, says CTU Economist Bill Rosenberg. “Price rises are usually low in December, having actually fallen in December in 6 of the last 10 years, so a rise of 0.4 percent is significant. Statistics New Zealand says that after taking these seasonal effects into account, it was equivalent to a 0.7 percent rise.”
Housing was the big pressure point for the cost of living. “Over the year, almost two-thirds of the increase in prices was due to higher cost of housing, mainly in higher rents and building costs. And that doesn’t take into account the much more steeply rising costs faced by those families trying to buy their first homes,” he said. The cost of building new houses rose 6.5 percent. Rents rose 2.0 percent over the year, but there are signs of more rapidly increasing rents in this current quarter.
“This emphasises the need for urgency by the Government in dealing with the crisis in housing affordability. The Government needs to take decisive action when it comes to housing.”
“Wage and salary earners will be expecting employers to recognise these rising costs in their pay, but without an effective system for pay negotiations in place, many working people who don’t have union coverage will be denied a pay rise. Our calculations show that 55 percent of employees who are outside coverage of a collective employment agreement didn’t get a pay rise to recognise the rise in the cost of the living and skill shortages in the year to September,” Rosenberg said.
