Cost of living outpaces inflation, jumping by 7.7%

Wednesday, 26 October 2022

Stats NZ’s cost-of-living data is designed to measure the impact of rising prices on households.

The cost of living jumped by 7.7% when people’s costs in the three months to the end of September were compared with those in the same period last year, Stats NZ has reported.

But beneficiaries and lower income households were a little less impacted by rising costs than the average.

Stats NZ reported earlier in October that the main of measure inflation, the Consumer Price Index, rose by 7.2% over the year.

But its estimate of the rise in the cost of living differs a little from that, mainly because it includes mortgage payments and disregards the cost of constructing new housing in its calculations.

Prime Minister Jacinda Ardern says New Zealand's inflation rate is starting to peak.

* 'Squeezed lower middle' facing biggest hit from rising prices

* Inflation may absorb impact of NZ's minimum wage, benefit rises

Rising interest rates were the main reason the cost of living outstripped consumer-price inflation.

The average household saw a 39% increase in their interest payments over the year, while the cost of building a new home increased by the dramatic, but still lower rate of 17%.

Stats NZ said beneficiaries and lower income households – those whose income was in the bottom 20% of all households – saw their living costs rise by 6.5% over the year.

But the highest-spending households, those whose spending was in the top 20%, saw their costs increase 8.8%.

That reverses a trend that applied up until last year when interest rates were low and the cost of living disproportionately impacted lower income households.

Higher-spending households tend to have larger loans, which is the main reason they would now be more exposed to rising costs than those on lower incomes, who are more likely to rent their homes.

Māori saw a cost-of-living increase of 7.7%, which was bang on the average, while the average rise for pensioners was 6.8%.

Stats NZ said the rise in the cost of living was the highest it had been for all those groups since it began collecting comparable statistics in 2008, but inflation data suggests it would also have been the highest for more than 30 years.

Consumer prices manager Katrina Dewbery said higher prices for housing and food had the biggest impact on consumers.

Petrol prices were another contributor to the rise for most household groups, increasing by 19% for the average household when compared with the same quarter last year.