Understanding inflation in New Zealand
Inflation isn’t just a headline. It’s something you feel every time you fill up the car, buy groceries or pay a tradie. But what does it actually mean and why does it matter for your financial future?
What is inflation?
It’s the rate at which prices rise over time. When this happens, the purchasing power of your money drops. That means the same dollar buys less than it used to.
In New Zealand, price increases are tracked by the Consumer Price Index (CPI), which monitors the cost of everyday goods and services. CPI changes reflect shifts in supply, demand and economic policy.
Why does inflation matter?
Rising prices affect more than just your day-to-day spending. They can quietly erode your savings, impact your investments and change how you plan for retirement.
Here’s how:
- Savings lose value: If your money isn’t earning interest above the rate of inflation, it’s effectively shrinking.
- Living costs rise: Budgeting becomes harder when essentials cost more.
- Investment returns shift: Market performance and interest rates often respond to inflationary pressure.
What can you do?
You can’t control the economy, but you can plan for it. Here are a few smart moves:
- Review your budget regularly to keep pace with rising costs.
- Invest wisely to grow your money faster than prices increase.
- Factor inflation into long-term goals, like retirement or buying property.
At RIVAL Wealth, we help clients build financial plans that work in the real world, including one where prices don’t stand still. If you’re wondering how rising costs are affecting your money, let’s talk.
This information is of a general nature and is not intended as personalised financial advice. RIVAL Wealth is a Financial Advice Provider (FAP) licenced by the Financial Markets Authority to provide financial advice. Our disclosure document is located at rivalwealth.co.nz or a written copy is available on request
