In March minister of finance Michael Cullen conceded that New Zealand could be headed for a “technical recession,” defined as two consecutive quarters of the economy shrinking. Then, earlier this month the Treasury announced that the economy (which contracted in the first quarter of 2008) may already be in recession, one which is likely to last at least until September. Inflation is at an 18 year high, mostly due to the rising cost of food- also at an 18 year high, up 8.2% just in the past year. New Zealand has seen a deep decline in consumer confidence, ranking at the bottom (along with the US and Latvia) of a survey of forty-eight counties. The Reserve Bank is going to consider reducing interest rates at its monetary policy meeting on July 24. It will likely ease the rates before the year end as households reduce spending and business investment slows. Independent economic researchers Berl have estimated however that New Zealand’s inflation targeting policy will cost 95,000 jobs over the next three years.

People are certainly finding it tough; waiting times to see a budget advisor have increased to two weeks as workers struggle with the rising cost of not just food but of petrol and electricity. Mangere Budgeting Service manager Darryl Evans told the New Zealand Herald; “This time 18 months ago you could guarantee to see a budget adviser the moment you walked in the door. Currently we are operating with a waiting list of two weeks. Demand is at an all-time high.”
There is also increasing concern on the effect food prices are having on public health, Winsome Parnell, associate professor of human nutrition at Otago University, told the Dominion Post that “For a long time there has been a group of people who can’t afford to buy the food they need, and that must be growing as prices go up...It must be getting more difficult, and a lot more stressful.”
The next few months (at least) are going to be a difficult time.