N.Z. COST OF LIVING

Evening Star, Issue 23511, 27 February 1940, Page 9

N.Z. COST OF LIVING

SOARING PRICES IN 1939 FALL IN PURCHASING POWER TREND HALTED AT EHD OF YEAR Mainly because of a substantial drop in the price of potatoes and onions, the soaring trend of retail prices in New Zealand during 1939 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 foil in the purchasing power of money in the Dominion over the year. . The year began with a nominal wage rate index of 1,081, a food group index of 991, a miscellaneous index of 1,054, an all-groups index of 951 and an effective wage rate (purchasing power) of 1,136, which was the highest point reached in New Zealand’s history. The food and 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. The 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 3Jd to 4Jd a lb in November, declined to from 5s to 6s a cwt sack. Onions showed a similar cheapening. Sugar and tea were among the commodities which rose in price, but these rises wore more than cancelled by the fall in potato and onion prices of nearly 400 per cent. A s a result, purchasing power rose from 1,074 in November to 1,082 in December. POSITION AT END OF 1939. Thd year ended with the nominal wage rate index at 1,102 jan increase in the 12 months of 21 points, the food index at 1,105, an increase of 114 points, miscellaneous at 1,124, an increase of 70_ points, and the all-groups index at 989, an increase of 38 points. The effective purchasing power index was 1,082, 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 192030 period, also a mid-depression year and' post-depression years-:

WAGES TAX NOT DEDUCTED. No deduction is made in these returns for the Social Security tax of Is 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 152 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 wages have risen by 7p.9 per cent., groceries by 91.2 per cent., dairy produce by 36.3 per cent., rent by 66.9 pei 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 months nn 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.

All Nominal Effective Food. retail wage wage group. prices. rate. rate. 1928 .. 1,004 1,006 1,016 1,010 1929 .. 1,013 1,004 1,017 1,013 1933 .. , 732 795 833 1,048 1935 835 837 858 1,025 1936 870 864 950 1,100 1937 .. 956 923 1,036 1,122 1938 991 951 1,081 1,136 1939 .. 1,052 989 1,100 1,110