Household living costs rose 5.2% in 2021, with mortgage interest included

Thursday, 10 February 2022

The consumer price index (CPI) records changes in the price of hundreds of goods and services. (First published January 20, 2022)

Households faced an average 5.2 per cent increase in the cost of living in the three months to the end of December when compared with their costs a year earlier, Stats NZ has calculated.

The annual increase was the highest it had recorded for seven of the 13 population groups it tracks since it began measuring household living costs in 2008, it said.

Stats NZ had previously reported that the consumer price index (CPI) rose at the higher rate of 5.9 per cent over the year to the December quarter.

Unlike the CPI, Stats NZ’s household-living costs estimate takes into account home-owners’ mortgage interest payments and Stats NZ has described it as “aligning better with the inflation experiences of owner-occupier households”.

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The rising price of petrol was one reason why higher-spending households were hit harder by inflation last year.

It does not reflect increases in the actual price of new homes, which shot up in the year to the December quarter, which partly explains why living costs rose at a lower rate than the CPI.

Unusually, better-off households were more impacted by higher costs than others during the year, Stats NZ calculated.

Prices manager Katrina Dewbery said the cost of living for the highest-spending households rose 5.4 per cent in the December quarter, when compared against the December 2020 quarter.

That was mainly due to higher prices for petrol, mortgage interest payments, and second-hand cars.

“However, this follows a long period of lower increases in living costs experienced by the highest expenditure group,” Dewbery said.

Māori households experienced an annual living-cost increase of 5.3 per cent, Stats NZ reported, which was slightly higher than the average due to the rate of rent rises.

The cost of living for beneficiaries rose by the lesser rate of 4.8 per cent, reflecting their proportionally lower expenditure on petrol and mortgage payments, Dewbery said.