We all know about price rises in the last few months. Petrol continues to increase, mostly because of the price of a barrel of oil on the international market. Mortgage interest rates have been increasing for some time although last week there was a slight drop of half a percent. High interest rates not only affect people paying a mortgage on their house but also affect those who rent. Landlords have to pay higher interest rates so rents have risen. Electricity prices will rise if there is a shortage of power this winter. And most importantly, food prices have risen by 10% in the last year. It is basic food that is costing more and that makes it difficult for families to manage. Milk has increased 21% in the last year, cheese 46%, butter 86%, bread 15% and meat prices have also increased.
It is easy to blame the farmers for being greedy. Dairy farmers are getting record high prices for their milk overseas. It is not surprising that New Zealanders have to pay more for milk and milk products too. Farmers say that transport costs have increased and although they are getting more money for their milk, they still only get 25% of what we pay in the supermarket, the same percentage as they used to get. Likewise, it costs more to produce meat today because of transport and the drought. Many farmers have had to buy hay earlier in the season than usual.
Statistics New Zealand says that food price rises will continue in the future because of transport costs and the recent drought. We have to get used to it. Some people have suggested that the government should take GST off basic food, the same as Australia. However, the government says it would involve too much paper work to have GST on some food like processed food, but no GST on basics like fruit and vegetables, milk and bread.
People on low incomes are finding it difficult to feed their families. Many have been to the City Mission or the Salvation Army to ask for food parcels.
Next week, the Minister of Finance, Michael Cullen, will present the budget. This is the plan for government spending in the next year. He has promised some income tax cuts but they will probably not be very large. |