Inflation effect adding to post-Covid inequalities, Stats NZ data suggests

Wednesday, 4 November 2020

Big spenders are enjoying a price freeze while others have not been so lucky.

High-spending households are benefiting from zero inflation on the mix of products and services they buy, while price rises are still impacting those with less to splash out, according to Stats NZ.

The data comes on top of concerns that the monetary response to Covid-19 is fuelling inequality by driving up sharemarkets and house prices.

Stats NZ said that thanks mainly to falling interest rates, high-spending households experienced zero inflation in the three months to the end of September, even while prices overall rose 0.4 per cent.

Superannuitants had experienced the highest inflation rate during the quarter – 0.7 per cent – because they were proportionally most impacted by rises in local authority rates bills, it said.

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“The highest-spending households benefited the most from the recent drop in interest rates, helping offset rising local authority rates,” consumer prices manager Nicola Growden said.

“Interest payments make up about $1 in every $10 of this household group’s spending.”

Spending on interest payments fell 6.4 per cent when compared with the three months to the end of June and by 10 per cent compared with a year ago, she said.

Meanwhile, rates rose 3.1 per cent during the quarter.

The Council of Trade Unions (CTU) voiced concern over a separate report from Stats NZ that indicated women had been disproportionately impacted by unemployment, which rose to 5.3 per cent in the September quarter.

CTU economist Andrea Black said the unemployment rate was 4.8 per cent for men but 5.8 per cent for women.

“It is also important to note that even in good times the unemployment rates for Māori and Pasifika are higher than for Pakeha,” she said.

“This trend continues with the Māori unemployment rate of 8.8 per cent and Pasifika at 8.1 per cent.”

Black said the council wanted the Government to invest more resources into social infrastructure, such as early childhood education, midwifery and the care sector.