Inflation in the real world is a greater burden on middle and low … – Stuff

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Inflation means the amount of money earned today wont go as far as it would have yesterday.

Rino Tirikatene is the Labour MP for Te Tai Tonga

OPINION: Inflation is, on the face of it, a problem thats easy to define.

Its a general increase in prices and a corresponding decrease in the value of money. That seems simple enough. But underneath that functional definition, stripped of any description of how inflation impacts people, is a wicked public policy problem.

For high income earners and the wealthy, the value of their savings diminishes. What the wealthy held yesterday is worth a little less today.

But more importantly for low- and middle-income earners inflation means the money you make today struggles to go as far as it did yesterday.

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The cost of food, fuel, and utilities increases even as wages you earn may remain the same. This is where the burden of inflation falls or where its felt more sharply: among low and middle-income earners.

This is why Prime Minister Chris Hipkins is committing to a singular focus on the cost of living.

Governments can seem distant. Especially in Southland as far from Wellington and Auckland as you can get.

But inflation reinforces the importance of Government and good policy. The decisions the Prime Minister and Cabinet make today can impact your life tomorrow.

The decision to extend the fuel excise reduction to June means the Government is keeping a lid on the cost of gas. This means the money you earn goes further even as the cost of a barrel of oil continues to escalate.

Similarly, the decision to increase financial support for the 880,000 people collecting superannuation and the veterans pension, 354,000 working-age beneficiaries, 52,000 students collecting student allowance, and 74,000 people receiving supplementary assistance means that more than one in five New Zealanders are receiving cost of living support thanks to this Government.

MONIQUE FORD/Stuff

Rino Tirikatene, Labour MP for Te Tai Tonga, says both inflation and Government policies impact our everyday lives.

That bread-and-butter package, to borrow Prime Minister Chris Hipkins phrasing, means superannuitants living together receive an additional $102.84 per fortnight between them while single people living alone receive an extra $66.86.

Thats significant, and it demonstrates our commitment to supporting New Zealanders with the highest needs.

This is also why former Prime Minister Jacinda Ardern announced an extensive childcare subsidy in 2022. Inflation and the cost-of-living impact people across the age spectrum from the young to the elderly.

Bruce Mackay / STUFF

Reserve Bank deputy governor Christian Hawkesby discusses inflation in February.

The extent of Government support should and does reflect that from support for childcare to increasing student allowance. In this sense, then, the inflation and Government policy isnt just theoretical.

It impacts our everyday lives.

For Southlanders this might seem very Wellington. Inflation. Policy. What about the real world?

But these issues do result in real world impacts.

Increasing the student allowance means people from lower income families can study without the need to, say, work full-time. Increasing superannuation means people who are retired can afford to live decent, dignified lives without having to worry about, say, the next power bill (thanks to Jacinda Ardern, superannuitants also receive the Winter Energy Payment).

Keeping the fuel excise subsidy means getting to and from work, school, and travel is cheaper than it otherwise would be. These are the bread-and-butter issues that this Government is focused on.

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Inflation in the real world is a greater burden on middle and low ... - Stuff