Inflation has hit a 15-month high of three percent. Photo: RNZ
A free budgeting service in Auckland warns it is seeing more people in financial and emotional distress, as households struggle to pay for basics.
Inflation has risen to a 15-month high of three percent, driven by higher rents, rates, electricity and food.
North Harbour Budgeting Services general manager Claudette Wilson said it saw more people in financial hardship who are at breaking point.
"We're seeing people that are highly distressed by the time they come in, which puts pressure on us as well," she said.
"We're seeing client after client that's highly emotional, very distressed, doesn't know which way to turn and can't see how they're going to live next week."
In the year to the end of June, Wilson said the budgeting service - a charity - helped 3000 people, a six percent increase on the previous year.
The service is free and does not receive government funding.
"We're seeing a lot of people who have been made redundant and they don't have reserves available to be able to cope with that loss of income," she said.
"Our biggest concern is those over 65. We're seeing a significant number of over 65s, who are on fixed incomes and can't cope with the rise in food or power, because a lot of them are renting."
Wilson said 40 percent of the service's new clients were pensioners, a five percent increase compared to last year.
FinCap's recent annual report showed mentors were dealing with a growing number of clients, despite a drop in the number of people working in the field. Some 25,140 closed cases were handled last year, an increase from 19,543 in 2021.
Changes to government funding for budgeting services meant a third - 44 - lost funding last year.
At the time, budgeting services called for an increase in funding to the sector, as the cost-of-living crisis had increased demand.
North Harbour Budgeting Services chair Rob Collins said the government continued to underfund the sector.
"The last Labour government cut funding to the sector in 2023 and the new coalition government doubled down on those cuts by defunding over 40 budgeting services throughout New Zealand."
He called for the Minister of Social Development Louise Upston to review that.
"[She] must restore those cuts and make additional funding available to cover inflation that has increased our costs just to keep the doors open in the last two years."
Collins said Auckland suffered disproportionately in this financial crisis, with 43 percent of KiwiSaver hardship withdrawals made by the city's residents and business liquidations happening at twice the rate of other regions.
He said more families unable to pay for basic household expenses were being driven to desperation.
"There are too many instances being handled by our financial mentors that cause us great concern for the wellbeing of our community and something has to be done to prevent further harm to families," he said.
"Our people are reporting a noticeable decline, not just in the financial health, but also in the mental health of their clients. Families are suffering."
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