Cost-of-living rose 6.2%, much faster than inflation

Monday, 29 April 2024

Kiwis faced an average 6.2% rise in their cost-of-living in the year to March as higher interest rates added to inflation and added to people’s money troubles.

Stats NZ reported last week that the inflation rate fell to 4% during the same period, down from 4.7% in the year to December.

But the cost-of-living is a better guide to the financial pressures on many New Zealanders as it takes into account the impact of interest payments, including mortgage interest payments, on people’s finances, whereas the inflation rate does not.

The cost-of-living fell at a slightly faster pace than inflation, dropping from 7% in the December year, but has remained higher than inflation over the past two years.

ANZ has forecast labour market data due out on Wednesday will show average hourly earnings in the private sector rose 5.9% over the year, which if correct would indicate households were on average slowly moving backwards financially.

Stats NZ consumer prices manager James Mitchell said that for many households, interest payments have made a significant contribution to living costs.

Interest payments increased 28% in the year to the March quarter, Stats NZ reported.

Because of that, the latest rise in the cost-of-living disproportionally impacted higher-spending households, with lower-spending households, superannuitants, Māori and beneficiaries on average less hard hit.