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Source: MIL-OSI Submissions

Housing costs lead annual 1.5 percent inflation – 17 July 2018

The consumers price index (CPI) inflation rate was 1.5 percent in the June 2018 year, mainly influenced by higher prices for housing, Stats NZ said today. This follows a 1.1 percent annual inflation rate in the March 2018 year.

For the June 2018 quarter, the inflation rate was 0.4 percent.

The largest contributor to inflation was higher prices for housing and household utilities, up 0.9 percent this quarter, and 3.1 percent in the year to June 2018.

Regions catching up in construction costs

In the June 2018 quarter, construction prices in Auckland and Wellington rose 0.6 percent and 0.7 percent, respectively. For the rest of the North Island, prices were up 1.2 percent – twice as high as the major centres.

Housing-related costs:

  • rents rose 0.8 percent in the June 2018 quarter and 2.5 percent in the year
  • construction of new dwellings (excluding land) rose 1.1 percent this quarter and 3.9 percent in the year
  • electricity prices rose 1.7 this quarter and 2.9 percent in the year.

“New Zealanders are paying more to keep their homes running,” prices senior manager Paul Pascoe said.

“Rates, property maintenance services, and home insurance are all higher than they were this time last year.”

Higher premiums, fire service, and earthquake levies across the year all contributed to an 18 percent increase in dwelling insurance in the June 2018 year.

Petrol prices up, but cheaper home entertainment

Petrol prices rose 3.2 percent in the June 2018 quarter, but this was countered by lower prices for used cars and home entertainment. Used car prices fell 3.3 percent, while subscriber TV and audio-visual equipment fell 7.2 percent and 15 percent, respectively.

“It was cheaper to buy a used car this quarter as dealerships looked to move some stock, but that was offset by higher running costs,” Mr Pascoe said.

“With implementation of the regional fuel tax on 1 July, Auckland consumers will experience higher prices next quarter.”

The national average price for a litre of 91 octane reached $2.06 in June 2018, with price movements varying across the regions. Wellington and the South Island had significantly higher inflation than Auckland and the rest of the North Island.

Home entertainment prices fell in the June 2018 quarter, with better value audio-visual equipment and lower prices for subscriber TV.

“Subscriber TV is in the top 25 largest items in the CPI, and includes pay TV and streaming services,” Mr Pascoe said.

“Sky TV’s recent changes to their packages and pricing influenced this quarter’s result.”

According to Sky TV’s 2017 annual report they had 778,776 subscribers in December 2017.

MIL OSI