Thursday, April 18, 2024
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High prices hitting home

Last week, I visited the foodbank in Martinborough, a leafy town generally more associated in people’s minds with wineries and relaxing weekends than food poverty.

So it was a shock to find about 180 people a week rely on handouts from the foodbank. The people affected are of all ages and stages. Many have found themselves inadvertently impoverished, often a double or even triple whammy.

Unexpected illness, job losses, or much-needed overtime hours cut. That, combined with hefty mortgage rates and other price rises, has left a growing number of households struggling. Old stereotypes of the sort of people who use food banks are no longer current. Homeowners and many with regular jobs are now reportedly using the facility regularly.

While the numbers needing help rose dramatically during the pandemic, they continue to rise even now.

And there seems to be no end in sight. Last week’s significant interest rate hike by the Reserve Bank can only increase the financial pain for many.

Last Wednesday, the bank hiked the official cash rate by 50 points to 5.25 per cent, saying: “Inflation is still too high and persistent, and employment is beyond its maximum sustainable level”.

To my non-economist understanding, this appears to mean the bank wants many people to lose their jobs to help bring down inflation.

And yet, here we are with thousands regularly needing food handouts in a region such as Wairarapa – which many consider economically stable. And this region produces much of the food it consumes – right here.

The inflationary impact of the two recent cyclones seems also to have been a major factor in the big rate hike.

“The recent severe weather events in the North Island have led to higher prices for some goods and services. This higher near-term CPI inflation increases the risk that inflation expectations persist above our target range,” a bank spokesperson said last week.

However, the economic situation looks set to worsen before it improves.

With many fixed-rate mortgages expiring over the coming months, people will have to refix on higher rates. Meaning more cash flowing to the banks, with less available for discretionary spending – such as food, which is not generally thought of as a luxury, but sadly where many will be forced to make cuts to find enough to pay skyrocketing housing costs.

It’s also sad and a cause for serious reflection that many Government workers are reportedly queuing for free food. These include nurses and emergency workers. The very people that every one of us will probably turn to when we most need help are those now turning to the foodbanks to help feed themselves and their families.

So where does it end?

We are always told that interest rate rises are necessary and bring only short-term pain. However, it might already be too late for those living pay-to-pay and hand-to-mouth.

In a general election year, with just six months to go until we head to the ballot box, the Government doesn’t have much time to start turning things around.

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