Share this
With inflation apparently “under control” and interest rates starting to come down, many New Zealanders might hope for some relief in their weekly budgets. Yet survey data and cost‑of‑living indexes tell a different story: households are still feeling squeezed, because the categories that dominate their spending are rising much faster than the headline CPI.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. For personalised support, please consult a qualified financial advisor or contact free services like MoneyTalks.
Why you still feel squeezed
-
Essential prices are rising faster than the average. June 2025 data show household energy costs jumped 9.1 percent, gas rose 15.4 percent, dairy and eggs were up 9.9 percent, insurance 10 percent, and council rates 12.2 percent. If petrol were removed from the Consumer Price Index, inflation would have been 3.2 percent, highlighting underlying price pressures.
-
Past price hikes have built up. Stats NZ’s Household Living‑Costs Price Index tracks how real household spending has changed. Between March 2020 and March 2024, overall living costs jumped 21–24 percent, with interest payments up 89 percent, insurance 31 percent, food 23 percent, petrol 31 percent and rent 19 percent. Even if inflation eases, these increases mean prices are much higher than they were pre‑pandemic.
-
Wages aren’t keeping pace. The minimum wage rose just 1.5 percent in April 2025 and almost half of workers received pay rises below 2 percent. Unsurprisingly, one in four New Zealanders (26 percent) say they are struggling financially.
-
Expectations remain high. An April 2025 Ipsos survey found 65 percent of people expect spending on essentials like food and utilities to rise. More than half (52 percent) think inflation will increase over the next year and 49 percent believe it will take longer than a year to return to normal. These expectations tend to make prices sticky, as households and businesses act as though costs will continue rising.
-
Central bank sees near‑term pressures. The Reserve Bank notes that administered prices and food are driving near‑term inflation. Medium‑term expectations remain anchored around 2 percent, but household expectations have ticked up.
What households can do
While individuals cannot control global energy markets or government policy, they can take steps to protect their budgets. Here are some practical strategies:
1. Audit your essentials and look for savings
Track your spending for a few months to see where cost creep is occurring. Compare electricity, broadband and insurance providers; and switching can save hundreds of dollars a year. Also, explore our Better Off Together program, which offers member‑only special offers and deals to help our members save.
More reading:
2. Maintain and protect your emergency fund
Last month’s Money Month campaign emphasised building an emergency savings buffer. Don’t dip into it unless it’s a genuine emergency. Keep the fund in a separate, higher‑interest account and automate your contributions.
3. Review debt and seek cheaper credit
With the OCR now at 3.0 percent borrowing costs should gradually ease. Contact your mortgage lender to see whether you can refix at a lower rate, switch to a shorter fixed term or restructure repayments. Consolidate high‑interest debt into a lower‑interest personal loan or balance‑transfer credit card – but be disciplined about closing old accounts and sticking to a repayment plan. If debt feels unmanageable, seek free advice from organisations like MoneyTalks (0800 345 123) or your local budget advisory service.
More reading: Practical Ways to Tackle Debt
4. Buy smarter and plan meals
Food remains one of the fastest‑rising household expenses. Focus on seasonal produce, buy in bulk where practical and minimise food waste by planning meals. Check unit prices and substitute high‑inflation items (such as dairy and eggs) with cheaper alternatives when possible. Farmers’ markets, community gardens and co‑ops can offer fresh produce at lower costs.
More reading:
- Six Ways to Save Money on Groceries
- A Guide to Meal Planning
- Eat Fresh All Year Long: A Guide to New Zealand's Seasonal Produce
Final Thoughts
While the official figures might point to easing inflation, we understand that many members are still feeling the pressure where it counts on everyday essentials. Focusing on the small, practical steps you can take makes a difference, whether that’s reviewing your spending, finding better value, or simply planning ahead with confidence.
We’ll continue to share ideas and resources to help you navigate these changes.
Reference
1. Reserve Bank of New Zealand – Monetary Policy Statement (Aug 2025): Explains that inflation is within the 1–3 percent target and the OCR was cut to 3 percent; highlights that administered prices and food are causing near‑term pressure rbnz.govt.nzrbnz.govt.nz.
2. NZ Council of Trade Unions – Cost‑of‑living keeps rising for those who can least afford it (Jul 2025): Reports that household energy, gas, dairy, insurance and rates are rising well above the CPI and notes that many workers’ pay rises are below 2 percent union.org.nz.
3. Ipsos – Understanding Aotearoa New Zealand: Cost of Living Report 2025 (Apr 2025): Finds that one‑quarter of New Zealanders struggle financially; most expect essential costs to increase and inflation to persist ipsos.com.
4. Infometrics – Household cost‑of‑living pressures still biting (Apr 2024): Shows that cumulative household costs have risen sharply since 2020, led by interest payments, insurance, food, petrol and rent es.infometrics.co.nz.
Leave a comment