Fixed-income households are no longer hardest-hit group from inflation
The annual cost of living was 5.2% higher for the average household in the December quarter compared to the same quarter in 2020, according to the Household Living-Costs Price Indexes (HLPI), released by Statistics New Zealand (Stats NZ).
Each quarter, the HLPI measures how inflation affects 13 different household groups, namely beneficiaries, Māori, five groups of income quintiles, another five groups of expenditure quintiles and superannuitants.
The increase was the highest recorded for seven out of the 13 household groups since the HLFI began its records in 2008, driven by higher prices for petrol, mortgage interest payments and second-hand motor cars.
Prices for interest payments – including mortgage – saw a 7.8% increase in the December quarter, with 7.3% of those from the highest-spending households, 4.6% from the average households and 2.1% from the beneficiary households.
“Interest payments started falling in 2018 and are now starting to jump back up,” said Katrina Dewbery, consumer prices manager at Stats NZ. “However, they are still at a lower level than they were two years ago.”
Not too long ago, the HLFI revealed that beneficiaries, superannuants and other households on fixed incomes were often the hardest-hit group from inflation. Since beneficiaries spend less on petrol and interest payments, they have been overtaken by the highest-spending households.
“This means the highest-spending households experience the price increase more than others,” Dewbery said. “However, this follows a long period of lower increase in living costs experienced by the highest expenditure group.”
Aside from the increased cost of living, the repeated lockdowns also have households saving more than expected. Last month, Stats NZ revealed that households had saved over $3.8 billion in the September quarter, with spending at $3 billion less in that quarter compared to the March and June 2021 quarters.