Household living costs have reached their highest level in almost two years, according to the latest figures in the Household Living-Costs Price Indexes (HLPIs).
Released on Tuesday by Statistics NZ, the HLPIs for the June quarter show living costs were up 3.2% annually. Household living costs are now at their highest annual level since September 2024, when the HLPIs came in at 3.8%.
On a quarterly basis, household living costs were up 1.4%, according to Stats NZ.
The latest data also found average households experienced a 15.4% drop in interest costs in the year to June, although these costs were still 4% higher compared to the March quarter.
The impact of the interest rate reductions meant the increase in the cost of living for the average household in the year to June came in at 3.2%. That's notably lower than the 4.1% annual inflation of the Consumers Price Index (CPI) over the same period.
The CPI is used by the Reserve Bank in its inflation targeting, where it targets an annual rate of between 1% and 3% on average over the medium-term.
The significant difference between the HLPIs and the CPI is that the HLPIs include interest payments, while the CPI instead includes the cost of building a new home. The cost of building a new home rose 2.7% during the year to June.
Stats NZ says the HLPIs measure how inflation affects 13 different household groups, plus an all-households group – an average household – while the CPI measures how inflation affects New Zealand as a whole.
The two measures of inflation are typically used for different purposes – while the HLPIs provide insight into the cost of living for different household groups, a key use of the CPI in New Zealand is monetary policy.
Interest costs have been falling in the HLPIs since June 2025. The last time interest costs peaked for households was the December 2023 quarter when they were up 31.2%.
Petrol price pain
Despite coming in lower than annual inflation, the 3.2% increase in HLPIs during the June quarter follows a 2.1% increase in the 12 months to the March 2026 quarter.
Stats NZ prices and deflators spokesperson Nicola Growden said higher petrol prices were the largest contributor to the increase in household living costs in the 12 months to the June 2026 quarter.
Petrol prices were up 27.5% in the June quarter HLPIs compared to a year prior.
“The increase in petrol prices had the largest impact on lower-spending households, as petrol makes up a larger proportion of their expenditure,” Growden said.
The rise in petrol prices coincided with supply disruptions caused by the Middle East conflict, which began at the end of February.
Petrol prices increased in both March and April but fell in May and June, according to Statistics NZ.
Diesel prices also increased in the 12 months to the June 2026 quarter, accounting for nearly 10% of the 3.2% average household inflation rate.
Diesel prices within the HLPIs are tracked via the private transport supplies and services data group, which reported an 18.9% increase in the year to June.
Growden said petrol accounts for a much larger share of NZ household spending than diesel.
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