Media Release
Bill English
National Finance Spokesman
24 January 2001

Inflation spikes working families

A spike in inflation, no matter how short-term, still leaves New Zealand households worse off, National’s Finance spokesman Bill English said today.

Mr English says it’s good news that the Reserve Bank now believes the spike in inflation will be shorter lived than was originally expected.

But he says working families should not lose sight of the fact that no matter how short-term the spike is, prices have increased by 4% in the last 12 months, which is significantly more than increases in wages.

"The increase in prices over the year 2000 represented a decline in people’s real purchasing power of around 1.5 percent.

"That’s less food on tables and less spending power overall. As families head into the new school year, and buy books and clothes, they’ll be wondering why their budget has to stretch more than last year.

"Prices have still moved to a higher level. Lower inflation just means prices will be increasing at a slower rate," Mr English said.

"One of the key issues for the Reserve Bank over the course of this year is the extent to which households will try and restore their spending power, through increased wages and salaries.

"The Government’s asking people to accept the fact that they are worse off after a year of Labour in charge, despite Labour promising they’d be better off. Questions remain over whether people will compliantly roll over and accept this decrease in their standard of living," Bill English said.

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