Many New Zealanders expect pay rises in coming months, but they are expressing increased concern about the harsh impact of the cost of living crisis on their own families’ lives, according to a new Reserve Bank survey.

Analysis: At 3 o’clock on the afternoon of Budget Day, entirely overshadowed by the speeches in Parliament, the Reserve Bank published new data on NZers’ expectations around inflation, house prices, whether they are likely to get a pay rise or lose their job, and whether they might be forced to miss rent or mortgage payments.

The conclusions are compelling, and somewhat chilling. The Bank has commissioned the quarterly survey of 1000 NZers, conducted by Research NZ, to help its monetary policy committee forecast inflation impacts, and decide how much it needs to hike interest rates to slow price rises.

As I’ve said before, expectations of inflation are in many respects more important than actual headline inflation. That’s because they tell us the future, rather than reporting the past. If workers expect their pay should go up, they will demand pay rises. If they fear defaulting, they won’t take out a large mortgage.

The survey finds that since the March quarter, New Zealanders pay rise expectations have risen 6.8 percentage points. But they also recognise that with greater pay pressure may come greater threat to their job security. Employers may not be able to sustain the payroll pressure – so workers feel 6.2 percentage points more at risk of losing their jobs.

On the housing front, people are increasingly nervous. Home-owners report a 4.6 percentage point increase to the likelihood they’ll miss a mortgage payment in the next three months, and renters disclose a massive 8.0 percentage point rise in the danger they’ll miss a rent payment.

And yes, I know there will be a chorus of grumpy emails about my failure to include raw percentages on the y-axis of this chart. There is a method to my madness, but it’s … complicated.

It’s about the difference between the median and the mean. What it means is that the magnitude of the change, from the March quarter to now, is more relevant than the raw numbers. Give me a call if you want to discuss further!

Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

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