Consumer Price Index (CPI) inflation came in at 1.5% in the year to June 2018, up 0.4% on the quarter before led by higher housing costs and fuel prices

Consumer Price Index (CPI) inflation came in at 1.5% in the year to June 2018, up 0.4% on the quarter before led by higher housing costs and fuel prices

Inflation was 1.5% in the 12 months to June with higher housing costs the main contributor, according to Statistics NZ's latest Consumer Price Index (CPI) figures.

That's up from 1.1% in the 12 months to March.

The inflation reading is bang on the Reserve Bank’s forecast.

Statistics NZ said higher housing and utility prices were the largest contributors, up 3.1% in the year to June.

This includes household energy prices, property maintenance, rent and property rates.

“New Zealanders are paying more to keep their homes running, Statistics NZ Prices Senior Manager Paul Pascoe says.

“Rates, property maintenance services and home insurance are all higher than they were this time last year.”

Dwelling insurance prices have jumped 18% when compared to the year to June 2018.

Pascoe says higher premiums, fire services and earthquake levies across the year all contributed to the jump.

Nationally, household rents were up 2.5% year-on-year, led by a 4.2% increase in Wellington, 2.5% in Auckland and just a 0.3% in Canterbury.

But the increase in newly built houses eased a bit from last quarter, increasing 3.9% in the June 2018 year compared to 4.7% in the year to March.

Auckland and Wellington were both up 3.4%, with Canterbury up 7.2% over the same period.

As expected, increases in fuel prices were also  a major driver of the June quarter’s CPI numbers.

When compared to this time last year, petrol prices were up by 10% – 3.2% higher than in the March quarter.

This is a shade below ASB’s fuel price expectations over the quarter. Kim Mundy, one of the bank’s economists, is picking fuel prices to continue rising in the second half of this year.

“With ongoing lifts in oil prices expected and both regional and nationwide petrol taxes being implemented in [the second half of] 2018, petrol prices are expected to lift higher still over the coming quarters.”

National’s Transport Spokesman Jami-Lee Ross says New Zealanders should be “seriously concerned” about Auckland’s fuel taxes, in light of Tuesday’s numbers.

“The additional taxes will lift the price of petrol by a further 25 cents per litre in Auckland – alone costing a typical commuting family up to $15 per week more than it does already.”

“We know it is hard working low to middle-income families that are most affected by higher petrol prices. The Government can’t pretend it’s concerned about New Zealand families, particularly those on lower incomes, and then turn around and implement policies that make things worse.”

The numbers and the expectations

CPI last quarter – 1.1% year-on-year, 0.5% on the quarter

RBNZ’s forecast – 1.5% year-on-year, 0.4% on the quarter

ASB’s forecast – 1.6% year-on-year, 0.5% on the quarter

Westpac’s forecast – 1.7% year-on-year, 0.5% on the quarter

KiwiBank – 1.6% year-on-year, 0.5% on the quarter

ANZ – 1.1% year-on-year, 0.1% on the quarter

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Quelle surprise. Gubmint assumptions series continues:

TWI - 72.72, Treasury BEFU assumption 'around 75'
WTI - 67.96 Treasury BEFU assumption 'around 60'


My home and contents insurance has gone up 23% in a year. The same for anyone else?

I looked at changing insurance companies, but they're all pretty much the same company.

Any idea why? Has the "risk" heightened?

Police stats suggest property crime has fallen 9% year on year.

Likely locational.

nzdan is perhaps seeing the impact of insurance companies no longer cross subsidising the inherently higher risk areas.

Agree, it is all risk based.

I question the basis of the risk analysis they use though. We are a small country sitting on a giant fault line. Simple fact is the entire country is at risk. The furthest from an active fault is Cape Reinga, and even that is <200km. Up until 2010 Christchurch was considered extremely low risk for earthquakes.

A major rupture off the coast of BOP and Auckland will be critical. Lets not kid ourselves that they are even remotely following the building code, let alone maintaining the more "rigorous" standards that Wellington are pretending to follow.

I think if they moved to accurate risk analysis we would likely see the end of insurance in NZ as the premiums would simply be too high to pay.

Wairarapa. Not really an area that I'd consider risk prone, but I'm happy to be proven wrong.

...You mean apart from this thing that runs right through it, correct?

Yeah, I’m happy now!

Read up on Quake History:

  • M 8.2 Wairarapa Tue, Jan 23 1855 - The 1855 earthquake is the most severe earthquake to have occurred in New Zealand since systematic European colonisation began in 1840.
  • M 6.9 Wairarapa I Wed, Jun 24 1942 - This earthquake severely rocked the lower North Island on June 24 1942, causing extensive damage to local buildings.
  • M 6.8 Wairarapa II Sun, Aug 2 1942 - The shock that struck the Wairarapa Region on 2 August was nearly as severe as the disastrous 24 June earthquake 5 weeks earlier.

We are a young country. Only minuscule in time, less than 150years ago, 1885 Wairarapa EQ NZ’s largest at 8.3.Noncents is so very correct. Our whole country is just one big risk area. How else did we get the Shakey Isles moniker. Next big one could be anywhere any minute afraid to say.

The wussy ComCom let a few of them merge and now one company owns ~65% of the market. That's a HHI score of at least 4225 based on that player alone. The US DoJ considers an HHI of 2,500 or greater to be a highly concentrated marketplace.

What a #!@& joke.

Is that really the case? Completely unacceptable if so.

Yes, but they blocked the Tower acquisition. It makes no sense to me. I can only assume they're corruptible.

This Government needs to understand that for every action there is an equal and opposite reaction, and this rule does not just apply to Newtons Third law of Motion.

Trying to "ban" landlords from supplying rental stock , by threatening them with all manner of taxes and reduced incentives, was always going to either have unintended consequences , cause an increase in housing costs or end badly .

Now increased housing costs have fed directly into inflation .

And the new fuel levy is not even in these inflation figures , so who knows where inflation will end up ?

This Government needs to understand that for every action there is an equal and opposite reaction


I don't think they are trying to 'ban' landlords. But the industry, (provision of rental properties, and overall housing costs) does need to be regulated. The laissez faire approach has led to a mess and many damaged people, and clearly not worked. The worlds experience in the realm is not good because every approach has been minimalist. The regulation just needs to be thorough. it is one clear demonstration that proves that free market theory and capitalism does not work. Regulation is required.

The issue is that if you make it more costly or difficult to be a landlord, more landlords will exit the market and fewer will join. Overall, there will be less rentals available, which will push up rents.

Some argue that rental properties being transferred to owner-occupiers means that people who would otherwise be renting have purchased a home, thus reducing rental demand. The reality is that a higher level of home-ownership among former renters is unlikely to completely offset the pressure on rental prices. This is because owner-occupied homes typically have a lower occupancy rate than rental homes, so the reduction in the supply of rental housing (caused by some investors exiting the market) will probably outweigh the reduction in demand for rentals.

I'm sure there are people out there who wouldn't mind paying more rent to live in a better quality home. If tenant's rights were to be improved in the future (i.e. longer tenancy periods, more freedom to modify etc.) people may not begrudge paying more in rent as it would be consider a viable way of living (like it is in most developed countries).

A lot of the problem is many people are paying significant amounts of their income to rent sub-standard accommodation (cold / damp houses). It's understandable then that they feel like they're getting ripped off by this.

BuyLowSellHigh - Absolute Rubbish.

@Nic Johnson , he has made valid remarks about the issue , but I dont think the lower occupancy per unit is the only reason for the problem .

We have simply allowed too many people in and they have either got skills ( and can afford higher rents ) or the have come in as "investors " and have money .

These newcomers have displaced Kiwi tenants , has had a domino effect, and the bottom of our social ladder have now got to either move out for the new owner , pay more rent or move into the back of the people mover .

the biggest cost incurred by any landlord is the one they impose on themselves - that of buying the property in the first place. A big problem is that many landlords directly or indirectly expect the taxpayer to subsidise their returns by charging rents that are simply unaffordable. They pay no heed to what a potential tenant can afford. They just rub their hands together in glee knowing they can rock up to WINZ to ask for an Accommodation Supplement. thus the taxpayer subsidises the current mess. They made a business decision to buy a property to rent out. They have no right to expect the tax payer to protect them from the follies of their decisions.

If a property investor paid half or a third the current price for their properties then they could rent out at a more affordable rate and gain a higher yield. But then the renters could also afford to own their own homes, cutting down on rental demand.

Murray86 it is the government and bureaucrats who are living off the regulation that have caused the is people living off the backs of capitalists, taking a cut for themselves, creating more regulation etc and nothing to do with laissez faire......

It is extraordinary to say capitalism doesn't work then expect with the other hand to strip out as much as you can get from a capitalist for yourself and yet that is what every politician, bureaucrat, public servant and other trough feeders me an economy that doesn't have capitalism that has a high standard of living and wealthy inhabitants?

Disagree - the last Government was in denial that equates to laissez faire. they did nothing. It might have had something to do with the fact that most MPs, irrespective of party, owned investment properties and were reaping it hand over fist from a lack of regulation, but it is still laissez faire.

And no, rampant capitalism, just like communism, does not work. That is the point of regulation - to maintain the balance.

The Government's man Phil is certainly bad mouthing private landlords and blaming them for children getting sick. Interesting no one publishes the number of children housed in Government or council rentals that get sick versus those in private rentals. Just today the good Doctor has pointed out he has patients with sick children from bad HNZ properties. Do not wish for regulation of property managers. This will restrict managers to those who are there as a result of being able to buy their way in rather than their skill level. My rentals are in a far better state of maintenance / condition than the social housing in my city.

The bottle neck is not landlords. It's the construction process. Building consents, covenants, land banking, infrastructure, RMA, health and safety costs, inspections, regulatory barriers like BRANZ preventing materials entering the market and so on. If people could just build a cheap polish or bunnings kitset house anywhere without all the red tape costs would come down.

Landlords are a middleman ticket clipper between the banks and the occupiers.

I do agree that some of the regulations (e.g. the ineffective insulation checks) is useless box ticking which is a burden on both tenants and landlords.

I could go on but this picture says it all:


The inflation figure is 1.5%. I think its fake. In real life I feel everything are getting more expensive. I guess 3-5% is closer to the real one.
Councils (eg rates), government (eg fuel tax), insurance premiums (cars, properties) are leading the charge in inflation.
I want an honest list of what goods and services are included in calculating the CPI

Don't worry, recession is coming.

CPI is a measure that generalizes consumption patterns over households in an entire economy. Many schools of thoughts agree that the method of calculation is flawed for being too simplistic and not considering the changes in consumption patterns that have occurred since the index was first invented. But nobody bothers changing it because it is in the best interest of policymakers, bankers and economists to understate inflation figures.
Governments and central bankers can stave off their responsibility of fixing structural issues by quoting low inflation and can use monetary easing as a quick fix instead. Banks make more by lending more and other corporations benefit from easier access to credit and more consumer spending in a low interest, low inflation environment.

CPI is an average. What would be more helpful to the average joe is a median.
Basically when things like a new Mercedes drop in price this drags the whole CPI down.

Real impact of all CoL changes (like increased tax) and the resulting drop in NZD will take a few quarters to feed through to CPI.


It's nothing to do with the new government and the terms Col, Taxinda etc are all baloney from individuals who have no idea about the realities of credit cycles. John Key bailed when he did because he knew (Like Tony Blair in 2006/07) that the debt binge in NZ was going to create a major hangover. He didn't want to get that legacy pinned on him, so he cleverly walked to the exit and handed the keys to the thrown room to poor unsuspecting Bill (who hadn't been a banker himself), and didn't really understand what had been creating the good times (It was just very loose lending Bill, artificially making people think they were richer because their houses went up and they subsequently all spent more )

Now we have new period in the cycle, this is where the wheel spins down, fast and will throw a good number of people off the ride leaving some spaces for others to climb on at the bottom. It's going to be great fun for those that are cashed up, bargains to be had aplenty. For the banks and the over-leveraged, not so much fun. 'Creative Destruction ' is a wonderful phrase and a wonderful phase in the cycle.


He also conveniently fell arse backwards into a top role with the biggest mortgage monger in the country.

Campaigns on tackling house prices, does nothing for 9 years, jumps ship and lands a job in a company that profits big time from house price inflation. No conflict of interests?

And so far only 1/3 of the households carry the $240,000,000,000 debt - to keep the system rolling they need to keep persuading people to take on new mortgages to cover the retirements of those that haven't yet cashed out and so the system repeats.. Except that it's breaking because already the 1/3 that owe the debt are starting to feel the strain of higher prices...

It was all a confidence trick you see. The biggest one in a Century except that people are starting to realise that it's 'fools gold'

Nic Johnson, what do you reckon to this one;

Owners bought in 2013 for 2.1 million. Tried to sell from July 2017 for BEO $2.8mil.
Didn't sell. Advertised it as a rental many months ago at $2995pw but got no takers. And then just listed it again now for sale again by negotiation.

Hi GingerNinja

I’m very flattered that you ask me, but i can’t claim to be an expert on Seatoun, albeit I know the house from earlier in the year.

$2995 per week rent would just cover a $2.1 million repayment mortgage over 25 years at 4.75% and leave a hundred bucks or so a week to pay a property manager.

They would have loved $2.8 million to get them out of a hole. (And if you live life by indices of property movements, you gamble big for big rewards). However in UK many houses that were bought at the top end in 2005 /06 are still today much lower.. whilst the middle market has gone up... you see some sections grow when others decline. My view here is that in NZ so many at the top end have re-financed that they don’t yet know how few buyers there really are - that’s next year’s fun..

Now you mentioned earlier that 3 of the 4 properties that you’ve bought have been purchases that you’ve regretted.... My guess is that the owners here will have this one on their regret list.

Now you could check on the mortgage at LiNz,if you were keen, but my guess is that the mortgage is probably over $2,000,000. What’s it worth? Whatever the next buyer is prepared to pay. Can they afford to sell it would be another question? Much of the languishing stock in Welly is very heavily geared to the extent that they can’t risk putting a price on it, just need another sucker.

Hope that helps


Nic, enjoyed that - thanks. The truth! My word if love hurts then the truth hurts one heck of a lot more.

Dito Nic, comment of the day summed it up perfectly!

Nic Johnson, Gingerninja, Foxglove, Retired Poppy,

Assuming it was 100% debt financed, at $2.1mn, and it is now vacant and unrented.

The property still has rates, insurance and maintenance costs requiring payment - that could be in the vicinity of $23,000 per year. So total carrying costs of the property including interest at 4.75% per annum could be to the tune of $122,000 per annum (or $2,349 per week).

If rented out at $2,995 per week (and allowing for 7.5% +GST property management fees), it could be positive cashflow if financed on interest only terms.

What is interesting to note is that the property was purchased in March 2014.

If the property was financed using an interest only loan, and if the interest only period is for a period of 5 years, then March 2019, could be when the debt service could revert to P&I, if unable to refinance on interest only terms. That would increase debt service payments by about 40% (and take total gross cash outflows to $167,000 per year which is equivalent to $3,224 per week) and even if the property was rented out at $2,995 per week, the property would then be in a negative cashflow position.

Also the universe of potential buyers is getting smaller if legislation passes restricting foreign buyers.

If unsold after March 2019, you could see additional financial pressure on the owner (who knows what the financier will ask the owner to do), potentially leading to an increased willingness by the owner to transact at a lower price.

The $2.1mn loan on $2.8mn asking price represents an LVR of 75%. If the bank assesses the property valuation lower than $2.625mn (a drop of 6.25% on the $2.8mn asking price), then the $2.1mn loan will mean that the LVR will rise above 80% of the bank valuation. Will the bank ask for a payment to reduce the loan to maintain a minimum LVR level of 80%? (i.e a margin call). Given that this property is obviously non owner occupied, the bank may not allow an LVR higher than 80% to a property investor. Does the owner have available funds or other unencumbered collateral to pledge to meet the margin call? If not, what will the owner do?

Of course, the key assumption here is that the property was purchased with a $2.1mn interest only loan. If the purchase was made using 100% equity and no borrowings whatsoever, then the annual carrying costs of $22,000 is obviously less of a financial strain and there is less financial pressure to act by an owner than compared to a highly leveraged owner.

CN thanks for your insights, you raise some good points. I will be watching what happens with this one.

It would be fantastic to see some 5% pa wage inflation for the next 5 years

Yeah, but unless we see some miraculous increases in productivity isn’t this wage growth just going to be viewed as inflation to be doused down with higher rates? And I just can’t see where this miraculous spurt of non-inflationary wage growth is going to come from, it’s just not going to happen....

The minimum wage is rising a staggering 25% in the next 3 years

Hopefully those who are currently on 25% more than minimum wage have a similar adjustment to their pay. And then those who are on 50% more than minimum wage also have an increase because the +25%ers shouldn’t be paid the same as the +50%ers.

CPI still below the mid-range target of 2%

Economy potentially looking more in the direction of stagnation with potentially rapidly rising price inflation...

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