Inflation 101: what it is, and how to stop it quietly eating your savings

You feel inflation at the supermarket long before you read about it in the news. A trolley that ran you $200 a year ago is closer to $206 now. That might not seem like much, but the increased power bill, the higher insurance renewal and the rent increase quietly add up. New Zealand's annual rate hit 3.1% in early 2026 — a notch above the top of the Reserve Bank's 1–3% target band, and after a few quiet years it's back near the top of the agenda. In this episode, SortMe Resident Money Writer Hugo Jonston strips the jargon off inflation and shows why, as an economic headline, it's easy to tune out — but for your own money, it's personal. A slow tax on every dollar you're holding in cash. The framing he keeps coming back to: $10,000 parked in a typical everyday account at 0.10% makes you about ten dollars in a year, but with inflation near 3% you now need roughly $10,300 to buy what that $10,000 bought last year. Same number on the screen — quietly $300 behind. You don't feel like you've lost anything because the balance never drops. *What's lost is the buying power of those dollars.* In this episode: - What inflation actually is — Stats NZ pricing a basket of the stuff we all pay for (weekly shop, rent, power, petrol, insurance) and the same thing said two ways: prices going up, or your dollar buying less - The two engines behind it — demand (households all wanting to spend at once, cheap borrowing, hot housing) and cost (oil, shipping, wages, a weaker Kiwi dollar) — and why the 2021–22 spike was a textbook mix of both - The quieter driver — expectations — and why breaking that loop is the Reserve Bank's main job, with the Official Cash Rate (currently 2.25%) as the lever - Twenty years of NZ inflation in context — most of the 2010s safely inside the 1–3% band, 0.3% in 2015, the post-pandemic peak of 7.3% in mid-2022 (the highest since 1990), and the climb from under 2% to over 7% in about eighteen months - The nominal-versus-real-return trap — a savings account paying 0.10% while inflation runs at 3% is handing you a negative real return of roughly minus 2.9%, even though the balance on screen never drops - Why the default everyday/on-call accounts at the big banks (0.10–0.40%) are where most of the damage happens — and why the easiest single win is getting cash off the floor - Matching the timeframe to the home — this week's cash stays in the everyday account, this month's cash earns more in a savings fund or HISA, long-term money goes into growth assets that historically beat inflation by a comfortable margin - Keep your buffer, then put the rest to work — emergency fund stays in cash you can reach; it's the surplus sitting idle that inflation feeds on - Where SortMe fits — every account in one view so the idle cash stops being invisible, the Cashflow Health Score flagging when you're holding more cash than your spending needs, and net worth over time showing whether your money is genuinely growing or just standing still Read the full article: sortme.com/post/inflation-101-nz