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.
14 Comments
my salary only went up 2.5% last year. no wonder I felt poor.
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.
It makes sense to have categories based on income levels to measure the HLPI, but why is there a category based on race ?
Different types of consumption? KFC Maybe?
Maybe keep the racism on Facebook?
He just came over from X...
was it racist when they gave out KFC vouchers for Maori and Pacifica to get the vaccine? lets be honest, it WAS targeted at them.
180 years (2-3 lifetimes) ago, the Maori people owned all of NZ. Yes, even including the land you own now. Then some people from a more technologically advanced culture called 'the English' came and bought (and stole) most of the land, and instilled their own governance on the country. Today, the Maori people make up 20% of the population and have significantly worse statistics than all other ethnic groups in NZ. That is likely to be from intergenerational trauma from all the crappy things NZ society specifically put them through. These days, we specifically track their performance in a lot of ways in order to track how we are going at righting the wrongs of the past, and getting everyone back to the same level. That is the least society could do.
I am not sure how the statistic in this case differs by race, but I would suggest you contact those collating the information instead of questioning this forum. That is just likely to cause ignorant outbursts.
Personally I would rather question the superannuitant category. As it is not means tested, it includes widowed grannies with no savings in council flats, wealthy retirees with large intergenerational property empires, and Winston Peters. I guess they lump them together to ensure the grannie can keep the lights on, but I wonder if they count up the wealthy superannuitants overwinter holidays, or Winstons whiskey spending in the stats?
Yes our priorities are quite backwards in this country. Everybody is flailing their arms about lunches in schools that originally budgeted $200 odd million, cut back by $130m resulting in pig food being served. "Why can't the parents feed their kids?" "Stop having kids you can't afford".
Yet silence when 4 - 5 x that original budget ($1b) is dished out like a lolly scramble to over 65's who haven't even retired and are earning over $100k p.a. so they can throw it in into a pokie machine on their Royal Caribbean cruise.
Brutal. Hopefully next year is better.
But this is by design by the RB to try and bring down inflation. Surprised it is only 3% based on things like council tax / rates which have increased by double digits in places for the last few years. The whole purpose is so people have less money to spend so businesses suffer with the decreased spending. But it doesn't work so well in a country with little competition in certain sectors, so things like Utilities can increase prices relatively easily.
How ironic. A higher OCR to beat down inflation. But it leads to COL increase for many, care of higher mortgage interest rates
More evidence that mortgage rates are still at an anti-growth level. Big cuts are on the way later this year to avoid a major economic meltdown.
There might be an ancient proverb or piece of wisdom suggesting that history does repeat, until the lesson is learned, and it will keep slapping you upside the head, harder and harder each time until you do learn.
Adam Smith may have been half onto something with his invisible hand concept.
Einstein may have been onto it to - two things are infinite: the universe and human stupidity; and I'm not sure about the universe.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.