COST OF LIVING

Wairarapa Times-Age, 20 February 1940, Page 3

COST OF LIVING

HALT IN SOARING PRICES. RECOVERY IN DECEMBER. (By Telegraph—Press Association.) WELLINGTON, This Day. Mainly because ot a substantial decrease in the price of potatoes afid onions, the soaring of retail prices in New Zealand during 1939 was halted in December. and effective purchasing power (the relation between costs and wages', which during the 11 months to November had retracted from the high levels reached in 1937 and 1938 to a level obtaining in 1935, recovered slightly. The year began with a nominal wage late index of 1081, a food group index' of 991. a miscellaneous index of 1054. an all-group index of 951, and an effective wage rate (purchasing power) of 1136, which was the highest point reached in New Zealand's history.

At, the end of November nominal wages stood at 1100, an increase of 19

points and the highest level recorded, the- food group at 1126. the highest since 1921, and an increase in the 11 months of 135 points. The miscellaneous group had also reached its highest level, at 1124, an increase of 70 points. The all-groups index stood at 1024, an increase of 73 points and the second highest level recorded. The action of mounting costs on purchasing power was shown in the decline in the index in the 11 months from 1136 to 1074. 62 points, or 5 per cent. The food and the miscellaneous group indices are singled out for quotation as, according to the Year Book a household budget, compiled in 1930 allocated 60 per cent of the expenditure to these items. The remaining 40 per cent includes rent, fuel and light, and clothing, footwear and drapery, in which the increases have not been substantial and are incomplete for the year.

The effect of the December recovery was no small one. Potatoes, for example, which were selling at from 3ijd to 4 : ;d a lb. in November, declined to from 5s to 6s a cwt. sack. Onions showed a similar cheapening. Sugar and tea were among the commodities which rose in price, but these rises were more than cancelled out by the fall in potato and onion prices of nearly 400 per cent. As a result, purchasing power rose from 1074 in November to 1082 in December.

The year ended with the nominal wage rate index at 1102. an increase in the 12 months of 21 points, the food index at. 1105, an increase of 114 points, miscellaneous still at 1124, an increase of 70 points, and the all-groups index of 989, an increase of 38 points. The effective purchasing power index was 1032. a decrease of 54 points on 1938.