Low-income earners hit

Press, 11 December 1989, Page 23

Low-income earners hit

NZPA Sydney Low-income earners in New Zealand have felt the brunt of falls in real disposable income and rising prices, Westpac said. The bank’s Wellington economist, Mr Stephen Toplis, said in the December issue of “Market Insights” that after a fall of 0.9 per cent in the June quarter, it was estimated that real disposable incomes fell 3 per cent in the September quarter. “Significantly, low-in-come earners appear to

have been affected the most,” he said. “The less well-off tend to spend a greater proportion of their income on necessity goods, such as food. Over the last year food prices have risen 11.8 per cent. “Therefore, a greater proportion of earnings have been spent on food, leaving less available for more expensive durable items.” While spending on food had increased, food consumption had dropped over the last year.

Mr Toplis said retail sales growth would remain constrained by falling real disposable incomes, continuing unemployment fears and interest rates supported at current levels. Estimates of the national accounts for 1988-89 showed the economy grew about 0.5 to 1 per cent inreal gross domestic product terms. Mr Toplis said sustained economic growth would not be achieved until the domestic economy began to expand as well as the external sector.