N.Z. COST OF LIVING.

Auckland Star, Volume LXXI, Issue 45, 22 February 1940, Page 4

N.Z. COST OF LIVING.

SOARING PRICES IN 1939. j FALL IN PURCHASING POWER. , TREND HALTED AT END OF YEAR. Mainly because of a substantial drop iu tile price of potatoes and onions, the soaring trend of retail prices in New Zealand during 1039 was halted in December, and effective purchasing power (the relation between costs and wages), which, during the 11 months to November, had fallen from the -high levels of 1937 and 1938, recovered slightly. On balance, however, there was a marked fall in the purchasing power of money in the Dominion over the year. Hie year began with a nominal wage rate index ol 1081, a food group index of 991, a miscellaneous index of 1054. an allgroups index of 951, and an effective wage rate (purchasing power; of 113(5, which was the highest point reached in New Zealand's history. The food ami the miscellaneous group indices are of special interest as. according to the Year Book, a household budget compiled in 1930 allocated 60 per cent of the expenditure to these items. Tile remaining 40 per cent includes rent, fuel and light, and clothing, footwear and drapery. in which the increases were not substantial and were incomplete for the year. In December potatoes, which were selling from 3%d to 4%d a 11) iu November, declined to from 5/ to 6/ a cwt sack. Onions showed a similar cheapening. Sugar and tea were among the commodities which rose in price, but these rises were more than cancelled by the fall in potato and onion prices of nearly 4(H) per cent. As a result, purchasing power lose from 1074 in November to 1082 in December. Position at End of 1939. The year ended with the nominal wage rate index at 1102, an increase, in the 12 months of 21 points, the food index at 1105, an increase of 114 points, miscel laneous at 1124, an increase of 70 points, and the all-groups index at 989, an increase of 38 points. The effective purchasing power index was 1082, a decrease of 54 points on 1938.

The following table shows the average yearly price and wage levels in two of the most prosperous years of the 1920-30 period, alsa a mid-depression year and post-depression years:— All Nominal Effective Food retail wage wage group prices rate rate 1028 ... 1004 loot; loir, lino 192!) ... 1013 1<«)4 1017 1013 1933 . . . 732 795 833 1048 1935 . . . 835 837 85,S 1025 1030 . . . 870 SO4 !>sl> HOO 1037 ... 056 023 1030 1122 1038 ... 901 051 IOSI 113(5 1939 ... 1052 OSO 1100 1110 Wages Tax Not Deducted. No deduction is made in these returns for thei Social Security Tax of 1/ in the £, previously 8d in the .£ for unemployment. No such tax existed in 1928 or 1929. The effective wage rate or purchasing power is calculated on gross earnings to-day as in 1928 and 1929. No allowance is made also for this wage tax in income tax assessments. Computed on the yearly averages, food costs have risen from 1935 by 217 points or 26 per cent, all retail prices by 1.32 points or 18 per cent, and nominal wages by 242 points or 28 per cent. The outstanding feature of 1939 was the sharp decline in purchasing power as compared with 1938. a movement which lias gone further since the beginning of the present year. Compared with 1914 nominal wa.ies have risen by 76.9 per cent, groceries by 91.2 per cent, daily produce by 36.3 per cent, rent by 66.9 per cent, fuel and light by 69.4 per cent, clothing drapery and footwear by 42.3 per cent, miscellaneous by 87 per cent, and all groups by 67.9 per cent. For the four war mont.hs tip to December, all retail prices in New Zealand rose by 2.2 per cent. The rent and clothing indices, however, are incomplete. In the two groups which absorb the bulk of the household expenditure, food and miscellaneous, the increases were 4.2 per cent and 4 per cent respectively.