There was an air of unease on the morning of the latest inflation figures. One could sense that those who were feeling the pinch of higher prices were holding their breath more than others.
I’m not sure what number would have encouraged any of us to breathe a little easier, so no movement was possibly a helpful result.
The numbers, of course, are always looking back at what has been recorded in the New Zealand economy.
A higher number would have added to the already elevated levels of anxiety about inflation. A lower number may well have been treated with caution, or even suspicion, because it would have been at odds with recent trends. It turned out to be 7.2 per cent – unchanged from the preceding quarter year.
The positive angle from Wednesday’s announcement was a hint of steadying or flattening of the inflation curve. It could indicate that prices are not going up at and an even faster rate than the dizzying jumps of December. I say could because another set of figures will be out soon enough, and no one has a crystal ball.
The cost of living is shaping as the single biggest issue for this year’s election. It has an impact on all of us. If you are trying to meet your weekly bills or trying to run a business, rising prices are by far the biggest spanner that could be thrown into the works.
With that in mind, I took the opportunity afforded [no pun intended] by the recent long anniversary weekend to ask a few people about rising prices and the forecast recession.
The range of views surprised me.
It went from not particularly up to date with the latest implications of rising prices, so not especially bothered … through to wondering where another possible cutback could be found in an ongoing effort to avoid defaulting on a direct debit payment. It made for very sobering listening.
The most common response to the question, “Are you worried about the upcoming recession or the impact right now of more than 7 per cent inflation?” was a slow, deep inhale and a look skyward with glazed eyes.
It was a question that had been pondered well before I had asked it. One that had not produced much in the way of an answer. Not yet, anyway.
The retailers in my impromptu focus group didn’t know which way to lean in the coming months.
If they try to absorb the higher costs, their business comes under increasing balance-sheet pressure and profits can drop quickly and maybe even disappear altogether. If they take an entirely different approach and pass on the costs to their customers, they run the risk of losing those clients and the revenues they bring: a devil and the deep blue sea scenario.
At least there are options, albeit critical ones. For parents trying to balance the books of a family of four, the decision about what to eliminate from the shopping list is a daily and weekly conundrum. In such situations, parents naturally draw toward protecting their children from the harsh realities of the world.
For a family in their own home, the reality of a mortgage rate rise could be too much to endure.
