Source: MIL-OSI Submissions
Source: Statistics New Zealand
26 July 2022, 10:45am – Increasing prices were widely felt across all household groups in the June 2022 quarter compared with the June 2021 quarter, Stats NZ said today.
The cost of living for the average household, as measured by the household living-costs price indexes, increased 7.4 percent in the June 2022 quarter compared with the June 2021 quarter. The cost of living for highest-spending households increased 8.1 percent, while it increased 6.5 percent for lowest-spending households and beneficiary households. All the household groups faced their highest annual cost-of-living increase since the series began in 2008.
Higher prices for housing and petrol were the main contributors to the increase across all the household groups.
Each quarter, the household living-costs price indexes (HLPIs) measure how inflation affects 13 different household groups, plus an all-households group. The consumers price index (CPI) measures how inflation affects New Zealand as a whole.
The all-households group, or the average household, represents all private New Zealand-resident households. Lowest-spending, middle-spending, and highest-spending groups relates to expenditure quintiles 1, 3, and 5. Household living-costs price indexes (HLPIs) on Datainfoplus has more information about the different household groups.
Inflation as measured by the CPI was 7.3 percent in the June 2022 quarter compared with the June 2021 quarter (see Consumers price index: June 2022 quarter), while inflation for the average household as measured in the HLPIs was 7.4 percent. These two measures of inflation are typically used for different purposes. A key use of the CPI is monetary policy, while the focus of HLPIs is to provide insight into the cost of living for different household groups.
One important difference between the two is the treatment of housing. The CPI captures the cost of building a new home, while the HLPIs capture mortgage interest payments. The treatment in the HLPIs aligns well with changes to the cost of living that households face.
In the HLPIs, interest payments increased 31 percent for the average household in the year to June 2022. In the CPI, the cost of building a new home increased 18 percent in the year to June 2022.
“The official cash rate, used by the Reserve Bank to control inflation, increased from 0.25 percent in June 2021 to 2.0 percent in June 2022,” consumer prices manager Fiona Smillie said. “This is reflected in higher costs for interest payments for households with mortgages.”
The highest-spending household group spends about 7.3 percent of their expenditure on interest payments. This compares with 4.6 percent for the average household and 2.0 percent for the lowest-spending household group. This means the highest-spending households experience the higher interest rates more than other household groups.
Lower-spending and beneficiary households experience higher inflation
Annual inflation for lowest-spending households and beneficiary households was 6.5 percent. These households faced higher prices for petrol and rent, as well as grocery food and interest payments.
Beneficiary households spend about a third of their expenditure on rent. This compares with about 14 percent for the average household and about 5 percent for highest-spending households. Therefore, increases in the cost of rent impact beneficiary households more than other household groups.
Māori households’ annual inflation 7.6 percent
The cost of living for Māori households was 7.6 percent higher in June 2022 compared with June 2021. This compares with 7.4 percent for the average household.
The increase was largely due to higher prices for petrol and interest payments, as well as for rent and grocery food.
Māori households spend a greater proportion of their expenditure on rent than the average household, at nearly 20 percent. This compares with about 14 percent for the average household. They also spend slightly more on private transport supplies and services, such as petrol. These contributed to their cost-of-living increase.
Quarterly cost-of-living increases also widespread
Quarterly living costs increased for all household groups in the June 2022 quarter compared with the March 2022 quarter. The cost of living for the average household rose 1.8 percent when compared with the March quarter. It was 1.4 percent for the lowest-spending households and beneficiary households, and 2.4 percent for highest-spending households.
The average household experienced an increase in petrol costs of 6.2 percent. It was a top contributor to quarterly inflation across all household groups.
A 25-cents-per-litre reduction in fuel excise duty on petrol came into effect in the March 2022 quarter, and road user charges were reduced in April 2022. Half-price bus and train fares came into effect on 1 April 2022.
“All these changes were reflected this quarter,” Ms Smillie said. “The half-price bus and train fares benefited all household groups except superannuitant households. SuperGold Card holders already receive free scheduled off-peak urban transport.”
Highest-spending households were more impacted by higher interest costs, whereas beneficiary households were most impacted by higher rent payments, which rose 1.4 percent.
