The High Price of Absolutely Everything

The High Price of Absolutely Everything

Bullying, price gouging and market monopolies — the real reason New Zealand is so expensive.

By Ollie Neas

You are standing in line at the supermarket, asking the checkout operator if you can double-check the receipt. You are at home huddled next to the heater, staring confused at the power bill. You are calling your landlord to ask how your rent just went up by 20 per cent. All over the country, people are asking: Is it just me, or is life really bloody expensive?

For Louie, a biomedical engineer in his 20s, it was when he realised his rent had doubled in five years — even though his bedroom was windowless. For American expat Lisa, it was the grocery bill: she spends about twice as much on groceries here as in the US. And for Evelyn, a retired postie in Naenae, it was electricity. “I feel shocked — angry — when I see the power bill,” she told North & South. “They’re getting money for nothing!”

The usual explanation is that New Zealand is a small island nation in a distant corner of the world. It costs a lot to ship goods here. And our small population makes it hard for businesses to grow big enough for large-scale cost efficiencies. This is all true. But what if it’s not the whole story?

Four times a year, a horde of data collectors descends on the nation’s shops, checking the price of everything from software and staplers to peaches and Panadol. Their purpose is the consumer price index — the official measure of how expensive life is in New Zealand. The story these numbers tell is curiously deceptive. On the one hand, the prices of many things, from clothing to phones to flights, have fallen drastically in recent decades, as once-closed economies like China have been folded into the global economy. We can buy suspiciously cheap t-shirts. Technology that was previously in the realm of science fiction is within reach of those on modest incomes.

The price of the big essentials — food, shelter, power, transport — has jumped, increasing faster than inflation.

But at the same time, the price of the big essentials — food, shelter, power, transport — has jumped, increasing faster than inflation generally. Over the last 35 years, household electricity prices in New Zealand have doubled in real terms, rising faster than in other developed countries. Food prices have risen 55 per cent in the past two decades, even though we produce enough food to feed over 40 million people. We all know what’s happened to house prices. The average price of a home is now over eight times median household income, compared to two to three times income until the late 1980s. Rents have risen 1.5 times faster than wages over the last 20 years.

This affects everyone, but some of us more than others. If you’re on a lower income, you have to eat food and turn the lights on — those aren’t optional extras. This means that essentials eat up a larger portion of income for those who earn less. Over the past decade, lower income groups — like superannuation households, beneficiaries and Māori — have faced nearly double the inflation rates of high-income earners. And yet New Zealand as a whole is wealthier than ever before.

Since 2017, the government has launched a series of investigations into major sectors of the New Zealand economy — from fuel to supermarkets to construction to electricity. Some are complete; others are still underway. Together they offer something tantalising — the possibility of an answer to a long-standing question about life in New Zealand. In a time of such abundance, why is it so hard to get by? And does it need to be this way?