This week yet another family in the same supermarket queue as me had to put some good back cos their card didn’t work.
I think the cost of living is growing as an issue that people care about. The Herald on Sunday has an interesting article this week.
We checked with hundreds of retailers around the country to measure the average price of 70 basic household items from the Consumer Price and Food Price indices. We found that their average cost has risen more than 5 per cent over the past 12 months. Items like beer, cigarettes, petrol and diesel have gone up 10 per cent or more just in the first months of this year; the prices of some fresh produce, like potatoes, carrots and butter, have risen as much as 50 per cent in the past 12 months.
This won’t surprise economists in their glass and concrete tower blocks on The Terrace in Wellington. The Treasury has predicted the Consumer Price Index (CPI) will rise 4.5 per cent in the year to March, and 5 per cent in the year to June.
Forecast inflation of more than 5 per cent means prices at the dairy, supermarket and petrol pump, and the cost of building a new house, will rise so steeply that wages won’t be able to keep pace.
Paul Keane, of retail consultants RCG in Parnell, says that in the 1980s people had secure jobs and their wages were rising. Today the economy is stagnant and inflation is increasingly rampant.
“In the eighties we all had jobs and salaries were good. It’s the reverse of today,” he said. “Mortgage rates were high but money was easily available, hence inflation for the average consumer was not too much of a problem.
You had drinks and barbecues at your home. You lived with it.
Eaqub says that while some goods may have become cheaper in the recent recession, as manufacturers compete for business, food has not.
“It might be cheaper to buy an LCD TV,” he says.”But it’s more expensive to buy milk. And this hits home because we can’t do without food.
“People have to keep buying food. But other retailers of what we call frivolous goods – a lipstick, for example – will feel the pinch.
“If people have to spend more on food, they will cut back on things they perceive to be less necessary items. I believe we’re going back into recession.”
In previous recessions people simply borrowed more money. But this time, he says, people are cutting back and spending less. That strangles the retailers. It is a vicious circle.