“Not only is the 1 percent overall rise in prices this quarter larger than expected, but it is concentrated mainly in necessities that hit the budgets of low and middle income households hardest,” says CTU Economist Bill Rosenberg, responding to today’s CPI release.
“Whether you look at the increase in the three months to the end of March or the whole year, it was housing, petrol, food and tobacco tax that made up most of the increase. The first three are at the heart of people’s budgets and cannot be avoided.
“Most of the falls in prices came from international air transport and package holidays which largely benefit higher income households.”
“People will be anxious to see their wages and salaries rise to at least recoup the 2.2 percent rise for the year,” Rosenberg says. “The labour cost index rose only 1.6 percent in the year to December and the average wage only 1.3 percent.
“But almost half (45 percent) of wage and salary earners didn’t get a pay rise over that year – and 55 percent of those who didn’t have a collective employment agreement.”
“With inflation back around 2 percent there will be increased pressure for employment laws that ensure working people get a fairer share of the income they create through their work,” says Rosenberg.
