Low inflation – time for meaningful wage increases

23 Oct

CTU Media release

With inflation low, now is a good time for workers to negotiate for pay increases that outstrip price rises and deliver real increases in wages and salaries. “For too many people, real pay increases have been missing for several years unless they worked longer hours,” CTU economist Bill Rosenberg says. “Productivity has been rising for several years but hasn’t been recognised in pay increases.”

“Housing and electricity costs are driving annual inflation. At an annual increase of 1.0 percent overall inflation is lower than expected and almost 80 percent of that is housing and energy costs. The Reserve Bank should be considering lowering interest rates rather than raising them. The focus should be on lowering housing costs by building more houses and improving state rental housing and private tenancy conditions rather than risking the uneven recovery with higher interest rates.” Rosenberg said.

Over the year, housing and household utilities, which includes rents, new housing and home energy prices, accounted for almost four-fifths (79.5 percent) of the increase in the CPI. Rents, costs of new housing, maintenance, rates and energy costs all rose at a rate well above the 1.0 percent rise in the CPI. By far the largest contributor to energy costs was electricity, which rose 3.7 percent over the year. Rents rose 2.2 percent, purchase of new housing 4.8 percent, rates 3.8 percent and energy (including gas and solid fuels) 3.6 percent. “And this doesn’t include interest payments, which rose 1.2 percent over the year,” Rosenberg said.

Inflation in Canterbury was considerably higher than the rest of the country at 1.6 percent for the year, with housing and utility costs rising 4.9 percent for the year compared to 3.4 percent for the country as a whole.


For further comment, please contact:

Bill Rosenberg, Economist, CTU

04 802 3815 / 021 637 991


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: