Govt rejects claims food prices causing poverty

Wages were rising faster than prices, the Government said today as it rejected Labour Party assertions that the soaring cost of food was driving people into poverty.

Labour's deputy leader, Annette King, questioned Finance Minister Bill English in Parliament and said half of the 200,000 children now living in poverty were from working families whose wages were so low they could not adequately care for them.

Mr English said most of the measures he had seen showed most of the children in poverty were from families on benefits.

"We don't know the situation of every New Zealander but it is a fact that main benefits have to increase each year at the same rate as prices and superannuation has to increase each year by at least the same rate as prices and often increases by more," he said.

Labour's finance spokesman, David Cunliffe, said the price of fruit and vegetables went up 12.8 percent in the year to May and families were struggling.

"All food prices have risen 7.4 percent in the year to May, with grocery foods making the most significant contribution," he said.

Mr English said the real after-tax average wage increased 2.5 percent in the year to March, after accounting for all consumer price increases including food prices and the one-off rise in GST last October.

"In the latest March year, the after-tax average wage grew 7.1 percent in nominal terms and 2.5 percent after adjusting for inflation."

The Green Party also said rising food prices were hurting families and government policies were making the problem worse.

"Fragile budgets are crumbling around the country in the face of rising food prices and high petrol prices," said co-leader Metiria Turei.

"For those on low incomes and benefits, who are required to spend their whole income on necessities, it has become almost impossible to make ends meet. Putting fresh, healthy food on the table is out of the question for many."

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