Inflation is an economic phenomenon that has profound implications for lawyers, because the great bulk of laws and legal doctrines have been formulated on the assumption that the value of money remains relatively stable.

When such an assumption is no longer tenable in much of the world, it threatens the operation of our most basic legal institutions. It highlights various areas of the law where inflation has continued to cause problems, focussing on contract and commercial law, damages in tort, taxation and succession to property including trusts, wills, and family breakdown.

Poverty and Inflation Connected

As the cost of basic needs increases, the amount of financial resources necessary to afford those needs also increases. Increasing costs lead to decreasing purchasing power. The concern is the disproportionately large negative effect of inflation on struggling families and individuals. Inflation inequality describes the disparities between the effects inflation has on the working class. There are multiple reasons why inflation affects people on lower incomes. Those on lower-incomes often do not have the opportunity to negotiate their wages. When prices rise, their wages tend to stay stagnant for a period. Consequently, their purchasing power plummets.

Those on higher incomes, tend to have jobs with inflation-adjusted benefits. When inflation occurs, these benefits limit the decrease in the individuals’ purchasing powers. This disparity is why during inflationary periods, income gaps widen. For some families the pressure is debilitating, especially when added to the impact of Covid-19 on their finances. Children are dropping out of school to support their families, adding to the truancy crisis of school attendance in New Zealand.

Permanent solutions to high inflation require drastic changes to fiscal and monetary policy. Political instability, dependence on foreign nations and unpopular side effects are some of the many reasons countries struggle to curb inflation.

Immigration Status

There is concern also for people who are undocumented and have no immigration status for genuine reasons beyond their control. The impact on children is particularly tough. Since 2006, any child born in New Zealand to overstayers is not entitled to New Zealand citizenship or permanent residence, making them ineligible for Plunket, child health services, tertiary education, benefits and wage subsidies. Many hope seekers would fill a much-needed labour shortage in New Zealand, or perhaps amnesty would provide an opportunity for pathways to residency.

There are programmes in the US that appear effective. The Deferred Action for Childhood Arrivals allows young undocumented people to go through tertiary study and provides a pathway to residency. Another, the Development, Relief and Education for Alien Minors (DREAM) aims to grant a right to work status and looks at granting full citizenship. Currently in New Zealand, there is no clear pathway for residence. It is a loss for New Zealand to not give people with genuine circumstances a chance to contribute formally to the economy.

However, as a church we could be a steward and provide advocacy and sanctuary for the people most affected by inflation, the rising cost of living and immigration status difficulties.