The cost of living for the average New Zealand household rose 6.2% in the year to the March quarter, Statistics NZ says, as interest payments on debt surged 28%.
These figures come from Statistics NZ's household living-costs price indexes (HLPIs). Unlike the Consumers Price Index, which rose 4% in the March year, the HLPIs include interest payments.
"For many households, interest payments have made a significant contribution to living costs," Statistics NZ consumer prices manager James Mitchell says. "This reflects mortgage interest rates remaining high relative to 2021."
"Interest payments increased 28% in the 12 months to the March 2024 quarter. The cost of building a new home [which is included in the CPI] increased 3.3% in the same period."
"Other contributors to living costs for most household groups were rent, private transport supplies and services (such as petrol) and insurance," says Mitchell.
Insurance increased 17.9%, while private transport supplies and services increased 9.6%.
The 6.2% cost of living increase for the year to March is down from 7% in the December 2023 year and 8.2% in the December 2022 year. The CPI peaked at 7.3% in the June 2022 quarter.
The HLPIs measure how inflation affects 13 different household groups, plus an all-households group referred to as the average household. There's more detail from Statistics NZ below.
Cost of living for the average household increased 6.2 percent
The cost of living for the average household increased 6.2 percent in the 12 months to the March 2024 quarter. This follows a 7.0 percent increase in the 12 months to the December 2023 quarter.
The largest contributors to the increase in the cost of living for this household group were:
- interest payments increased 28.2 percent
- private transport supplies and services increased 9.6 percent
- insurance increased 17.9 percent.
Cost of living for beneficiaries increased 5.3 percent
The cost of living for beneficiary households increased 5.3 percent in the 12 months to the March 2024 quarter. This follows a 6.2 percent increase in the 12 months to the December 2023 quarter.
The largest contributors to the increase in the cost of living for this household group were:
- rent increased 5.2 percent
- interest payments increased 27.2 percent
- cigarettes and tobacco prices increased 10.2 percent.
Rent makes up 29 percent of beneficiary household expenditure. This compares with 13 percent for the average household, and 4.4 percent for highest-spending households.
Cost of living for Māori households increased 6.3 percent
The cost of living for Māori households increased 6.3 percent in the 12 months to the March 2024 quarter. This follows a 7.1 percent increase in the 12 months to the December 2023 quarter.
The largest contributors to the increase in the cost of living for this household group were:
- interest payments increased 28.4 percent
- rent increased 5.2 percent
- private transport supplies and services increased 9.6 percent.
Cost of living for superannuitant households increased 5.2 percent
The cost of living for superannuitant households increased 5.2 percent in the 12 months to the March 2024 quarter. This follows an increase of 6.1 percent in the 12 months to the December 2023 quarter.
The largest contributors to the increase in the cost of living for this household group were:
- insurance increased 20.0 percent
- property rates and related services increased 9.7 percent
- private transport supplies & services increased 9.5 percent.
Insurance makes up 6 percent of superannuitant household expenditure. This compares with 4.1 percent for the average household.
“Superannuitant households are more likely to own their own homes and not have mortgages than other household groups,” Mitchell said. “Higher prices for insurance and rates have more impact than for other household groups who are more likely to rent or have mortgages.”
Cost of living for highest-spending households increased 6.6 percent
The cost of living for highest-spending households increased 6.6 percent in the 12 months to the March 2024 quarter. This follows a 7.3 percent increase in the 12 months to the December 2023 quarter.
The largest contributors to the increase in the cost of living for this household group were:
- interest payments increased 28.3 percent
- insurance increased 16.4 percent
- private transport supplies and services increased 9.4 percent.
Cost of living for lowest-spending households increased 5.7 percent
The cost of living for lowest-spending households was 5.7 percent in the 12 months to the March 2024 quarter. This follows a 6.6 percent increase in the 12 months to the December 2023 quarter.
The largest contributors to the increase in the cost of living for this household group were:
- rent increased 5.4 percent
- insurance increased 19.9 percent
- property rates and related services increased 9.7 percent.
32 Comments
Now remember, our 3 step plan for tackling the cost of living...
Step 1: The apparently dumb but very intelligent step...
- Increase the cost of living for households with debts
- Protect the savings of households that already own houses
- Increase the cost of doing business
- Constrain investment in new capacity, housing, productivity (and all of that dumb stuff)
- Free up labour markets by letting lots of people in who will be prepared to sleep 10 to a house and work night shifts in care homes
Step 2: Wait for the impact...
- Are wages coming down yet? [No, people are pushing hard for higher wages so they can pay their bloody bills]
- Can you see jobs disappearing yet? [No, new arrivals are filling all the vacancies, and I am apparently oblivious to the thousands of people joining the dole queue]
- Are prices moderating? [No, because they were never going up because people had too much money you fool]
Step 3: Whoops - this is really bad.
Use tax instead of the OCR.
OCR = BAD: The OCR enriches net savers (the already rich) while screwing the younger indebted ... While enriching offshore lenders (already rich) while further screwing our balance of payments.
TAX = GOOD: Using tax allows money to stay in NZ and to either pay down debt or invest in stuff private enterprise won't invest in because they can't make enough (without ripping off the taxpayer?). It also allows targeting groups that are contributing to inflation.
Rates are not high historically and need to stay around this level to avoid NZD losing value which would push inflation higher. The trouble is so many people purchased property which is way overpriced borrowing more than they can afford to pay after refinancing at higher rates, the 20% drop over last couple of years is just the start of housing price crash.
Great piece and great first comment.
If I've got it right, things will cost exponentially-more form here on in. Debt can fill some of that gap - indeed all of it - but at some point, the ponzi have to become obvious; it increasingly cannot be repaid, and sooner or later, won't be issued, partly because insuring the issuance becomes impossibly (this is AIG in 2007/8, x3. Next year, X4...
Rates, and REAL taxes, will outpace incomes until the system hits the wall - the middle class are now being referred to as the Precariat, and what was once a bell-curve is now a single right-hand-end turn-up. The left hand end is below zero...
We are seeing it in everything; health, education, transport, infrastructure; all struggling to maintain within 'budget'. Few seem to understand that 'budgets' reflects 'limits'.
They are struggling to be within budget (at least in health, education)as their budgets have been too high for too long and under lax management who have been allowed to push the limits for 6 years under the Labour government. This has caused widespread behavioural change and currently we are in a phase of mass behavioural adjustment to having overspent with very little to show for it, and everyone is having a whinge around how 'tight' budgets are, when in reality they simply cannot get away with the level of expenditure they got comfortable with. The money was debt, and debt is now pretty pricey. So, coupled with higher costs of infrastructure materials, companies quoting overpriced for jobs, nobody, it seems, is willing to drop prices - consultants, tradies, housing vendors etc to what the market demands.
Of course, you can offset these increased costs by selling your car, eating less, not having a family etc.
Think of it not so much as a cost but a saving as in saving the planet from fossil fuels, lessening congestion, reducing your obesity, and depopulating the planet.
And leaving others more of everything that you can't afford.
It's all a coincidence.
What about the cost of living for caucasian or polynesian or asian people ? Don't they matter ?
Yes. Understanding cost of living pressures between different SECs (socio-economic class) is far more important.
Naturally, those at the lower end of the scale feel cost pressures more in terms of the entry level on the hierarchy of needs (food, shelter, energy) while those at the higher end of the scale feel cost pressures in terms of self actualization (type of luxury car and the pain of having to trade down).
"Yes. Understanding cost of living pressures between different SECs (socio-economic class) is far more important. "
Yes, we should focus on the lower socio-economic class - i.e. households in the bottom decile(s) of household incomes in the different regions of NZ.
Let's avoid the race based classifications.
The upside of all this inflation is you quickly learn what you can live without. Perfect example, after moving into a smaller house, we had items in storage- when the storage rates went up 25% last month, all of a sudden we decided to get rid of the stuff in storage ( If the price had lifted just 10% we wouldn't have bothered) instead we made a little pocket money on Trade Me, and one less monthly cost - that now goes towards the Mortgage.
Interestingly we heard the storage place we used is laying off staff and now wont expand to a new facility.
That's the spiral effect of inflation and it will be happening all over the country. Families will cut down on meals out, new furniture, trips away, renovations, all the nice to haves - in order to cover the essentials. I wonder though if companies had been a little less greedy with their price increases, whether the nice to haves could have been kept, saving a lot of companies and a lot of jobs.
"That's the spiral effect of inflation and it will be happening all over the country. Families will cut down on meals out, new furniture, trips away, renovations, all the nice to haves - in order to cover the essentials."
The 'spiral effect' you refer too can become extremely dangerous. That's what happened in the 1930s and we called it the Great Depression.
One should note that an epidemic preceded that event too. And that time it was made way, way worse because the mega-rich - that had been spending - effectively stopped spending - and waited for the inevitable before buying up heaps of stuff at rock bottom prices. If they do the same again .... well ... Why wouldn't they?
This time we should invest in guillotines to ensure history never repeats. [evil grin][yes, that was black humor, or was it?]
I know of more than one person that has 'put thing in storage' when moving cities. I think the reasoning was that they didn't know what they might need to take, what their new place would fit, whether or not they'd be returning in a year or two, or just couldn't be bothered selling things.
Many years later everything is still in storage, untouched, and forgotten about. Some people just have a hard time giving things up. Of course the bills still come.
A lot of similarity here with 'accidental landlords'. What seemed like a good idea might now just be a burden that should be dealt with.
Agreed. Certainly in the hospitality sector, getting too greedy with price increases only serves to burn their customer base. It becomes a self feeding doom loop as reduced customers = higher prices/margins needed to cover fixed overheads, which then makes eating out unaffordable/unjustifiable to more people, so prices must rise again to cover the shortfall.
Until you're going from, hypothetical, 500 patrons a week +/- 30 to 200 patrons a week +/- 50.
We had dinner out the other night, and decided to go somewhere a little nicer than we would normally. As it was a treat, I chose a lamb main that was more expensive than some of the other mains.
I received two smallish slices of roast lamb served in a dessert bowl, whence I could lift the pieces out onto my dinner plate. Couldn't believe it.
Not kidding. Rather deflating considering how much better food you can get for $47 in town. We can eat an excellent Asian meal for two for $47 in many places in Central Auckland (not including drinks).
This "nicer" restaurant seems to be undergoing Cadbury/Griffins levels of shrinkflation. So disappointing we won't be going back again. (No, I won't call them out by name on the internet. I can imagine they're eroding their own customer base enough as it is.)
Except what people are forgoing is access to GPs & dental services, medication, insurance, registrations, essential repairs for living and transport, housing, basic nutritional necessities, children, legal costs for justice as victims of crime...
With cuts like those it is no wonder families want to leave NZ.
This !!!!
Thanks Gareth. The HSPI really needs promoting. Big time!
As I've said - ad nauseum - the CPI should be renamed the RBNZ's CPI. No one else - especially mainstream media !!! - should be using it to reflect the true cost of living increase.
(Just quietly - interest.co.nz might get more eyeballs for promoting the HSPI.)
"Rent makes up 29 percent of beneficiary household expenditure. This compares with 13 percent for the average household, and 4.4 percent for highest-spending households."
Well, that's a wakeup call.
Guess I need a [massive] pay rise. As the banksters say "I need to pay myself so much to keep talent like myself" - and I do deserve it.
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