Council of Trade Unions media release
20 January 2011

Inflation impacting hardest on low income workers

The annual inflation rate of 4 percent announced today means that price increases are outstripping wage rises for many workers, said the Council of Trade Unions.

CTU Secretary Peter Conway said: “A large part of this increase in the CPI is down to the Government’s unfair tax changes, with the rise in GST adding an estimated 2 percent to the inflation rate. Forecasters estimate that private sector wages will only increase by 1.5 percent in the year to March 2011. The tax cuts which came into effect in October gave significant benefit to those on high incomes while the GST increase impacts negatively on those on low and middle incomes.”

“Food and petrol prices also account for a large part of the sharp increase in the CPI. Both of these items impact more on the cost of living of the low paid for whom they swallow up a larger proportion of their take home pay.”

“We expect to see the inflation rate go higher in the year ahead. Real wages are falling as a result, causing New Zealand to drift further and further behind Australia. The Government must take all these factors into account when it considers the upcoming annual adjustment to the minimum wage.”

Peter Conway said that employers can expect unions to be seeking appropriate wage increases this year which take all factors into account including the ongoing effect of higher prices.

ENDS

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