High mortgage interest rates continue to contribute "significantly" to the cost of living for New Zealand households, Statistics NZ says.
Latest Stats NZ data shows the cost of living for the average Kiwi household, as measured by the household living-costs price indexes (HLPIs) increased 3.0% in the 12 months to the December 2024 quarter.
That's down from 3.8% as of the September quarter, but is nevertheless still higher than the 2.2% recorded by the official measure of inflation, the Consumers Price Index (CPI) in the year to December.
The HLPIs hit 8.2% in the 12 months to December 2022, while the most recent high for the CPI was 7.3% in June 2022.
The significant difference between Stats NZ's household living-costs price indexes (HLPIs), and the CPI is that the HLPIs include interest payments, while the CPI instead includes the cost of building a new home.
Stats NZ says each quarter, the HLPIs measure how inflation affects 13 different household groups, plus an all-households group (an average household). In contrast, the CPI measures how inflation affects New Zealand as a whole.
And it says the two measures of inflation are typically used for different purposes. A key use of the CPI in New Zealand is monetary policy, while the HLPIs provide insight into the cost of living for different household groups.
Stats NZ says in the three years since December 2021, interest payments have increased 104%. Over the same period, the CPI increased 14.7% and the HLPI all-groups increased 19.3%.
"For many households, interest payments on mortgages remain high and continue to contribute significantly to living costs," Stats NZ's prices and deflators spokesperson Nicola Growden said.
"Though it's still high, we have seen inflation for mortgage interest payments continue to slow from its heights in 2022."
Interest payments increased 7.1 percent in the 12 months to the December 2024 quarter. The cost of building a new home increased 2.0% in the same period.
Other contributors to increased living costs for most household groups were property rates and related services, insurance, and rent.
Looking at the different household groups measured by the indexes, the lowest spending households had the biggest increase in the 12 months to December 2024, of 3.9%. Superannuitant households had a 3.6% increase. Beneficiary households had a 3.3% increase. Maori households had a 3.1% increase.
The highest spending households saw a 2.7% increase in costs.
2 Comments
Yet interest rates are not historically high. It's the debt load that's historically high.
https://www.rnz.co.nz/news/national/238723/rbnz-warns-of-more-interest-…
We had a blip called the GFC that was papered over without the structural flaws being addressed.
https://www.rbnz.govt.nz/monetary-policy/monetary-policy-decisions
Look at the history of the OCR and how the language and narratives have changed. In many instances OCR changes have not been a direct response to inflation. It's all assumptions and beliefs, which suggests a fundamental flaw in understanding the drivers of inflation, plus a lack of ability to address unintended consequences. Although some of these consequences might be intended, just not for the benefit of the majority of people.
Interest rates, economic growth and "productivity" may not be the saviour everyone is led to believe.
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