Inflation has risen sharply in recent years, leaving many Kiwis wondering why they still feel broke even as official figures show it easing. The truth is that the impact of inflation builds up over time - and it’s hitting everyday budgets harder than ever.
Understanding Inflation and Why It Matters
At its core, inflation means one thing: everything gets more expensive. It’s measured through the Consumer Price Index (CPI), which tracks the average cost of a basket of goods and services most households use.
The Reserve Bank aims to keep inflation between 1% and 3% each year. For a while, we were well outside this band, with inflation peaking at 7%. While the rate has since fallen back, the cumulative effect is stark – over the past five years, total inflation has risen by 23%.
The challenge? Wages have not kept pace. While groceries, housing, and utilities are up nearly a quarter in cost, average incomes have barely shifted. For many, that means pay packets no longer stretch as far as they once did.
Everyday Costs That Prove the Point
Looking at the weekly shop makes the brutal truth of inflation obvious. Essentials like eggs, butter, milk, bread, and cheese have all soared in price. For example:
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A box of eggs that cost $4.31 in 2021 now tops $10.01.
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Butter has risen from $6.89 in 2020 to $8.59 in 2025.
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A supermarket roast chicken that once sold for $11.70 is now $15.70
It’s not just groceries. Rent has climbed 24% in five years, with Auckland’s median rent up from $560 to as much as $690 a week. Meanwhile, mortgage repayments peaked when interest rates hit 7%, leaving households paying thousands more each month at their worst point. Even though rates have since eased, that financial pressure lingers.
Why You Still Feel Poor
So why do people feel poor when inflation has “come down”? Because prices don’t go backwards. A loaf of bread that jumped from $1.32 to $1.81 doesn’t return to its old price just because inflation slows. The cumulative effect of years of price hikes is permanent, while wages lag behind.
On top of this, job insecurity has increased, with restructures and redundancies adding to financial stress. Rising unemployment and limited wage growth mean that many households simply don’t feel the benefits of lower inflation.
Taking Back Control
The conversation made one thing clear: the solution lies in taking action. Income growth – through career moves, business opportunities, or investment – must be part of the plan. Managing expenses wisely, avoiding overreliance on debt, and focusing on property or share investments can also help households move forward even in tough times
Key Takeaways
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Inflation has risen 23% over the past five years, pushing up the cost of essentials.
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Wages have not kept pace, leaving households worse off despite “lower” inflation figures.
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Groceries, rent, and mortgage repayments highlight the long-term impact of inflation.
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Feeling poor is the result of cumulative price increases and limited income growth.
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The solution is clear: grow your income, manage expenses, and invest with a plan.
Next Steps
Book a time with a Financial adviser and get a plan in place to take control of your future.
If you’d like to learn more, check out these other episodes below.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
