Kiwis reveal what they are going without as inflation hits middle-income earners

Inflation in New Zealand is not just hitting the poor, it's got a firm grip on lower and middle-income earners.

Even if you can meet your food and housing costs, the squeeze is on middle New Zealand.

Inflation was predicted to drop this week, but while it did fall it was only by 0.1 percent.

Inflation remains high at 7.2 percent with food prices a big perpetrator going up 4.1 percent in the last three months, with fruit and veg the real budget killers, rising 17 percent in the last quarter.  

"It does appear that inflation is going to stick around for a while longer and it's now very firmly wedged into the economy," Infometrics principal economist Brad Olsen told The Project. 

"There is the risk that the inflationary pressures we are seeing here domestically might that come through because of how weak the New Zealand dollar is could see a further peak as we move into the new year."

Those on lower to middle incomes are being "squeezed hard" by inflation, Olsen said, as 35-40 percent of jobs in the economy haven't seen a pay rise in the last 12 months.

There's no help on the horizon either as the $350 Cost of Living Payment was a one off – for those who received it - and the half-price public transport fares and fuel tax trim will be parked up by January.

Kiwis told The Project what they are now having to go without including specialist visits, pricier vegetables such as lettuce and bell peppers, and expensive fruit like mango and watermelon - even a bar of soap has increased.

"Cut cloth to fit, so fewer holidays and more focus on basics," one Kiwi said.

Those who bought homes more recently are going to be "stressed to the max" when it comes to mortgage repayments, which means less money to spend towards other parts of the economy, Olsen said.

"[It] should, in time, bring the temperature of the economy down abit and eventually ensure that inflation pulls back abit as well."