The cost-of-living crisis is far from over, with a new report revealing that the purchasing power of New Zealand’s lowest-paid workers has fallen by as much as 6.7 percent over the past three years, while electricity, groceries, rates and medical costs continue to climb.
The New Zealand Council of Trade Unions Te Kauae Kaimahi (NZCTU) has released its October 2026 report, Real Wages and the Cost of Living, 2023–26, delivering a critical assessment of the National-led Government’s record on household affordability.
The report argues that while inflation has eased from its earlier peaks, the cost of essential goods and services remains substantially higher, and wage increases have failed to keep pace for many working households.
The findings are particularly concerning for Māori, Pacific peoples, women, young workers and disabled workers, who the NZCTU identifies as more likely to earn at or near the minimum wage.
With the November 7 general election approaching, the union movement is calling for urgent changes to wage-setting, employment protections and the cost of essential services.
THE NUMBERS: HOUSEHOLD BILLS KEEP CLIMBING
The report uses Statistics New Zealand data to examine how essential living costs have changed between September 2023 and September 2026.
Some of the largest increases have been in household energy, council rates and everyday groceries.
<text weight=”medium”>Price increases over three years</text>
| Essential expense | Increase |
|---|---|
| Household energy | +29.2% |
| Property rates and related services | +28.8% |
| Medical services | +13.5% |
| Petrol | +7.9% |
| Food overall | +7.6% |
| Housing rentals | +7.4% |
The report also identifies particularly sharp price increases for individual grocery staples.
Milk prices have risen 27.9 percent, bread is up 17.3 percent, and beef and lamb have both increased by more than 30 percent over the three-year period.
These figures help explain why many households continue to struggle despite a reduction in the headline inflation rate.
The NZCTU argues that slowing inflation does not mean prices are falling. It simply means they are rising more slowly.
For families already struggling to meet weekly expenses, that distinction is critical.
LOWEST-PAID WORKERS HIT HARDEST
One of the report’s most significant findings concerns the declining purchasing power of the minimum wage.
Between June 2023 and June 2026, the nominal minimum wage increased by 5.5 percent.
However, once inflation is taken into account, its purchasing power declined.
Depending on the measure used, the report calculates that the real minimum wage fell by between 4.3 percent and 6.7 percent.
The report argues that the household living-costs measure for low-income families provides a particularly relevant assessment because it reflects the spending pressures experienced by those on the lowest incomes.
Under that measure, minimum-wage workers have experienced a 6.7 percent decline in purchasing power.
The NZCTU says the result represents a significant deterioration in living standards for some of the country’s lowest-paid workers.
EVEN A PAY RISE DOESN’T NECESSARILY MEAN YOU’RE BETTER OFF
The report also examines several broader measures of wage growth.
Between June 2023 and June 2026, average hourly earnings increased by 12.9 percent before adjusting for inflation.
However, when household living costs are taken into account, the increase in real average hourly earnings was just 1.1 percent.
When adjusted using the living-costs measure for the lowest-income households, the change was negative 0.2 percent.
The standard Labour Cost Index, which measures changes in pay for comparable jobs, increased by 8.8 percent before inflation.
After adjusting for household living costs, that measure showed a 2.5 percent decline in purchasing power, or a 3.8 percent decline using the low-income household measure.
The NZCTU says the different indicators tell a consistent story: wage growth has delivered little improvement in purchasing power for many workers, while the lowest-paid have experienced significant losses.
WHY MĀORI WHĀNAU ARE PARTICULARLY EXPOSED
The report identifies Māori, Pacific peoples, women, younger workers and disabled workers as groups more likely to be employed in jobs paying at or near the minimum wage.
That makes them particularly vulnerable when the cost of essentials rises faster than wages.
The report also shows that lower-income households devote a substantially larger share of their spending to essential goods and services.
For households in the lowest-income fifth, food, housing rentals, rates, energy, health and petrol collectively account for 54.6 percent of expenditure.
For the highest-income fifth, those same categories account for 38.3 percent.
That difference means increases in essential costs can place proportionately greater pressure on households with the least financial flexibility.
For Māori whānau already managing housing costs, transport, kai, health expenses and other financial commitments, the findings raise questions about whether economic recovery is translating into meaningful improvements in everyday living standards.
The NZCTU represents more than 370,000 union members, including approximately 60,000 Māori workers through Te Rūnanga o Ngā Kaimahi Māori o Aotearoa.
UNIONS SAY GOVERNMENT HAS FAILED ON COST OF LIVING
The report delivers a direct political criticism of the National-led Government, arguing that it has failed to deliver on its commitment to address the cost-of-living crisis.
The NZCTU points to continued increases in essential prices, weak real wage growth and rising unemployment as evidence that working households remain under considerable financial pressure.
It also criticises changes to welfare and employment settings, arguing that these have increased financial insecurity for vulnerable households.
The report acknowledges that overall inflation has moderated since the peaks experienced in 2022 and 2023.
However, it argues that the improvement has not been sufficient to restore household purchasing power.
The report is an analysis produced by the union movement and reflects its policy priorities and assessment of the Government’s performance. It does not include a response from the Government.
WHAT DOES THE NZCTU WANT THE NEXT GOVERNMENT TO DO?
The union movement is calling for a broader approach to the cost-of-living crisis that goes beyond reducing inflation.
Its recommendations include restoring sector-wide bargaining through Fair Pay Agreements, re-establishing an effective pay equity system, introducing a standalone care and support settlement, and lifting the statutory minimum wage to the Living Wage.
The NZCTU also wants the Employment Leave Act repealed and stronger protections for workers’ holiday pay.
Beyond wages, it is calling for action to address high prices and limited competition in essential sectors, including supermarkets, energy and banking.
The report also advocates tax and welfare reforms to improve the living standards of lower-income households.
The NZCTU argues that controlling inflation alone will not resolve the financial pressures facing working families unless wages rise sufficiently to restore lost purchasing power.
THE COST-OF-LIVING TEST FOR ELECTION 2026
With New Zealanders preparing to head to the polls, the report adds another dimension to the debate over economic management.
Political parties are making competing promises about tax, spending, employment and economic growth, but the NZCTU argues that household purchasing power must remain a central measure of success.
For many working families, the question is not simply whether inflation has fallen or whether the economy is growing.
It is whether their wages can cover the mortgage or rent, electricity, groceries, transport and other necessities without leaving them financially stretched.
The central finding is confronting: despite three years of wage increases, many New Zealand workers have gained little ground, while those on the minimum wage have gone backwards.
And for Māori and Pacific workers, who are disproportionately represented among lower-paid occupations, the pressure can be particularly acute.
As the election campaign enters its final stages, the challenge for political parties is to explain how they intend to deliver an economy in which working people can afford the essentials and genuinely improve their standard of living.
Because for whānau struggling to make ends meet, the real measure of economic success isn’t what happens to inflation on a graph — it’s what remains in the bank account after the bills are paid.
Source: New Zealand Council of Trade Unions Te Kauae Kaimahi, Real Wages and the Cost of Living, 2023–26, October 2026.
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