Source: Radio New Zealand
RNZ
The words “cost of living” have become synonymous with a struggle faced by an increasing number of Kiwi families. The news is full of stories about the price of butter, pain at the pump and pay parity. With the phrase first popping up in newspapers more than a century ago, reporter Kate Green takes a dive into the history of tough times.
The year is 1912, and the government, faced with rising inflation, has ordered a royal commission of inquiry into the cost of living.
An article by the Press Association in May 1912 explains: “The Commission is ordered to enquire into such questions as: Has the cost of living increased in New Zealand during the past twenty years; if so, has that increase been more marked during the last ten than during the previous ten years? To what extent is the increased cost of living, if any, the result of the higher standard of living?”
The resulting document was a huge catalogue of prices, wages and anecdotal evidence.
It gave insights into things like housing: “Mr Leyland, timber-merchant, Auckland, stated, ‘We are apt to forget that only a small proportion of the workers pay rent to a landlord. It would surprise you if you knew the number of houses, say in Ponsonby, in which the dwellers are the owners or own a considerable equity. In the street in which I live every house is owned by the occupier, and I know of another street where only one occupier pays rent to a landlord.’”
And school supplies: “Dr Mcllraith, Inspector of Schools in the Auckland district – ‘I find that the cost of maintaining children at school nowadays is considerably less than it used to be. Ten years ago the school-books for Standard I cost about 4s. a year. Now they do not cost the children more than 2s. 3d. a year.’”
And drinking habits: “[One] table seems to show that the volume of liquor consumed per head fell during the time of low prices of products, and rose during the period of high prices.”
In 1912 the government, faced with rising inflation, ordered a royal commission of inquiry into the cost of living. Supplied
The average weekly income per family was three pounds, four shillings and three pence – less than Australia’s four pounds, 13 shillings and one pence – and they spent about 39 percent of their income on food.
These days, that was closer to 16 percent, according to Stats NZ data.
Economists RNZ spoke to pointed to a number of gruelling periods of financial hardship, many with catchy names: the Black Budget, Rogernomics, and Ruthanasia.
The Muldoon era had an inflation rate of 18 percent – much higher than on Saturday, which was 3 percent in September.
Robert Kirkby, a senior lecturer at Victoria University, said the country’s woes on Saturday were caused by wages failing to keep up with inflation.
“So we’ve had a bunch of inflation over the past couple of years. It’s mostly gone away now, but as a result of that inflation, the prices are higher now than they were, say, three or four years ago. Substantially higher – like 20, 30 percent higher.”
And wages had gone up, but not as much.
“And so that slight difference that the prices have gone up, a little bit more than the wages, is the cost of living crisis, if you will.”
Despite what people might credit to their own success, wage increases happened as a matter of course, Kirkby said.
“When we get wage increases, we tend to think it’s ’cause we earned it, and when the prices increase, we tend to think that’s our bad luck, or was outside our control, right? And so people don’t view their wage increase over the past five years as simply reflecting the inflation – they view it as a reward for their effort.”
Nicola Growdon from Stats NZ explained they had been tracking prices since the 1900s. The items tracked changed over time. Records had been replaced by cassette tapes, and then by CDs, and more recently by music streaming subscriptions. Landlines had been replaced with cellphones.
Reserve Bank Governor Anna Breman. RNZ / Samuel Rillstone
“It does show how society changes over time,” Growdon said.
And there had always been times where things were tight.
“You know, the global financial crisis,” Growdon gave as an example. “We also saw in the immediate period after the Canterbury earthquakes, so just in terms of the impact that had, and supply shortages, things just weren’t as available during that period.”
In November, the Reserve Bank cut the official cash rate to its lowest in three years, to 2.25 percent.
The finance minister promised the country was on the up, with better times ahead. Meanwhile, experts told RNZ while there were green shoots across the playing field – for now, they’re patchy at best.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
