Hipkins has enjoyed a bounce in the polls, but now economic conditions are biting into living standards of the average Kiwi

Just as economic conditions  are biting into the living standards of the  average New Zealander, so are they darkening for the Labour government.

For Chris Hipkins, who has  given Labour  a  bounce in the polls, the  charmed  run he has enjoyed could be coming to a  brutal end.

He may  be pinning  his  hopes on  his Finance  Minister, Grant Robertson, working a miracle in  a  budget  that  will produce a glow to  warm the  average taxpayer. The problem  for Robertson, though,  is that if  he spends up large, as he did through the Covid pandemic, he  may  just prolong the agony inflicted by high prices, because  the Reserve Bank  will have to sustain interest  rates at a peak as it tries,  in Governor Adrian Orr’s phrase, to “cool the jets”.

In  any  case, the Prime Minister  contends prices are  beginning to stabilise.

That doesn’t wash  with the  average householder who has just seen — and felt — the impact of food prices rising by 12.1%.

The April 1 boost to  benefits, large as it was, was supposed to  offset rising costs but failed to  do so.

Similarly, the headlines  this week portended how the looming recession could be be twice as deep as previously thought, with Kiwis being warned to prepare for a tough rest of the year.

Food prices are rising at their fastest annual rate in more than 30 years and many Kiwis are struggling to afford the basics.

NZ has another  serious economic issue, the dismayingly big  gap between export receipts and import payments. ANZ Bank  chief economist Sharon Zollner says this shows New Zealanders have been living beyond  their means.

ASB is predicting a 2% contraction to gross domestic product (GDP) by early 2024, which is double the 1% economic shrinkage that the bank forecast in its previous quarterly update.

The country’s expected recession is likely to set in earlier than expected, according to the latest ASB Economic Forecast,  with GDP falling 0.6% in the December 2022 quarter.

ASB chief economist Nick Tuffley says high-interest rates and inflation will continue to restrain consumer spending in the coming year, with homeowners feeling the strain and pain the most.

Tuffley claims the Reserve Bank (RBNZ) is reaching the end of its Official Cash Rate (OCR) rises, despite inflation being anticipated to remain above 7% for the first half of this year.

“Things have overheated, and the stimulus to get us through the pandemic has been arguably too successful at keeping the economy running along, so now we’re feeling the effects of that and the economy being stretched,” Tuffley said.

“We expect rising living costs to add around $150 a week to household spending this year, and income growth is not likely to keep pace with this, despite another year of strong wage growth. It’s going to be a tough year, and home borrowers will feel these impacts disproportionately.”

The  problems  don’t end in the households in the cities. Farmers on  whom  the country depends  for  most of the countries’ export income have been hard hit by  inflation, as  well as  by the climate warriors who are calling on the government to cut herd  numbers (and methane emissions)  just  when  the nation  needs every cent  it can earn from export receipts.

So  the  issues are piling up on the government.  And  even if  Hipkins can solve them  all, will the average punter think  he deserves  another term, as government debts pile up to be paid at a later date?