The annual cost of living for the average household increased 5.2% in the December 2021 quarter, year-on-year, Statistics New Zealand says.
For seven of the 13 housing groups Statistics NZ has been measuring since the data series began in 2008, the December quarter saw the highest increase since the series began.
The Household Living Costs Price Index (HLPI) measures how inflation affects various household groups, including beneficiaries, superannuants and high and low spending households.
The 5.2% average household increase sat between increases of 4.8% for beneficiary households, and 5.4% for high-spending households. Māori households experienced an annual living-cost increase of 5.3%.
High spending households broke their long run of lower increases, said Katrina Dewbery, consumer prices manager at Statistics NZ.
The HLPI, which reports on households, is a separate measure from the Consumer Price Index (CPI) which measures the effect of inflation as a whole and was up 5.9% in the December 2021 quarter.
The two measures also treat housing differently: the CPI captures the cost of building a new home while the HLPI captures mortgage interest payments.
"In the HLPIs, interest payments increased 7.8% for the average household in the year to December 2021."
"In the CPI, the cost of building a new home increased 16% in the year to December 2021," said Statistics NZ.
Households appear to be still adjusting to the to rude awakening from a long-term climate of low interest rates that had reigned since the aftermath of the Global Financial Crisis (GFC).
“Highest-spending households spend 7.3% of their expenditure on interest payments, compared with 4.6% for the average household. This means the highest-spending households experience the price increase more than others,” said Dewbery.
Aside from increased mortgage or rent payments, other factors weighing heavily on household cost of living were higher prices for petrol and second-hand cars.
Higher petrol prices contributed to quarterly inflation for all 13 household groups in the December 2021 quarter, but impacted middle-spending households the most.
The middle-spending household groups spend 5.2% of their expenditure on petrol, compared with 4.6% for the average household, said Statistics NZ.
37 Comments
I believe many don't really understand the potential impacts of this inflationary environment we are currently entering. Maybe they believe, like the Govt, that it is transitory but it isn't.
With wage growth lagging and a population severely juiced up on debt I think the rapidly rising cost of living, combined with rising interest rates is going to really hurt this country. Blame whoever you want but when you encourage reckless borrowing/spending with a view that nothing will ever change and it is just 'normal', then at some point reality is going to send you a big wake up call.
True. Dynamics have changed a bit since the last market oversupply event.
Plenty of US shale assets have changed hands during Covid-19 from independent producers to oil majors. These corporations, unlike the independents, play the long game for higher margins and are less likely to flood the market with supply in response to higher crude prices.
I have been saying for almost two years that the stupidly reckless, un-necessary ultra-loose monetary policy enforced by the clowns at the RBNZ would have caused enormous problems to the NZ economy and society. I have also been saying that the timidity by Orr in raising rates in the last few months will be paid dearly later on, with even higher rates.
Unfortunately, it seems that I was right.
The OCR must be raised to 3% at the very least, and right now, if there is any hope to keeping inflation in check. The longer we wait, the higher interest rates will have to go later on. The urgent need to raise rates now, and aggressively so, is becoming a real emergency. Maybe it is the time to finally sack Orr and put at the helm of the RBNZ somebody who knows what is doing and is not afraid to take the urgent if unpopular necessary steps.
Where is our beloved, hand holding, hugging, showman hand gestures on the podium PM? And her favorite bureaucrat Orr?
They have created this mess for us poor kiwis and our families. This is not a big deal for rich kiwis. So certainly there is no team of 5 million now as i am being hammered with high costs, high prices of almost everything.
Paying taxes and a lot more of GST. I even pay taxes/GST on the food i buy to feed my family. And basically these politicians salary I am paying by feeding less to my kids. The bureaucrats and politicians who get salaries from the tax and gst i pay are responsible for my kids not getting a full feed now.
They should bring policies which help me and my family and bring the cost of everything down in this country. I do not pay the salaries of bureaucrats up just warm bum on seats and do nothing. If they can decrease OCR by 1% and create this mess, grow balls to increase by 100 basis points straight away and fix this inflation right now.
Unfortunately they are never, ever going to admit that any of this is their fault and will in fact to continue to preach how great they have in done and continue down the path of "We know best, shut up and do what you are told".
The only way out of this is voting, and then we have another issue.......does any party genuinely want to step up and fix this? I think there would have to be some tough calls made that may not be popular with some but if NZ and the majority of its people are in very dark place, voting for a 'sea change' may look very appealing indeed.
Covid created the mess and our reserve bank and government are just reacting to it. The same issues are being felt the world over. Europe was going through stagnation and hasn't done much at all with rates due to covid, and theyre still getting inflation. Our supply chains and production capacity is based on overnight delivery and covid has disrupted that.
You're naive if you expect the pandemic wasn't going to hit people in the pocket somehow, rises in asset prices become worthless if they're not realised.
@Pa1nter mate, Inflation is not everywhere in the world mate. It's only in countries who had loose fiscal policies or dumb people making them.
Look at Israel, I think the smartest small country in the world. That's what intelligence means in how to react to a pandemic.
But who am i explaining this too.. The grey cells would have to work hard to understand.
Hey Bro, check it out
https://en.wikipedia.org/wiki/List_of_countries_by_inflation_rate
We're sitting about in the middle for inflation worldwide.
Unavoidable, because we are all tied into the same global market, that is in turmoil. This is a long game.
Gas prices going up and will soon be scarce as Labour have banned oil & gas extraction.
https://www.pce.parliament.nz/media/197015/restricting-the-production-o…
It’s seems the government cannot deal with more than one thing at a time Omicron is all they are interested in if these muppets don’t start sorting out housing and inflation the protests will overwhelm wellington. People have had enough of showing passports for a coffee most people have had Jabs and just want to get on with life without government dictating over our life’s Omicron is here and 5 boosters will not stop it.
Yeah it's almost like governments are accustomed to taking long periods of time to make decisions rather than making lots of vital decisions in very short timeframes.
Sort of like how most large companies I'm dealing with are struggling to get by day by day, and aren't making long term decisions.
…while low interest rates will only drive an ever-greater proportion of capital into housing and other rentier assets, while discouraging risky productive lending. Which is already our biggest economic problem and one that will dog us for decades to come with the setup we have. It has to end somewhere.
High inflation only hurts the poor and middle-class - for the rich, a 10% increase in prices means nothing. But for the poor and middle-class, it erodes their savings and future.
And we can see the rich have ridden out this pandemic quite well, thank you very much.
The rich own assets that appreciate faster than the rate of infaltion. The middle class and poor have few assets, earn a set sallary that changes once (maybe twice) a year and spend most (if not all) of their income on living expenses.
Global elites who make the rules are absolutely creaming at the expense of the average Joe. And they will let inflaiton run high rather than crash the stock market.
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