Household living costs rose 3% annually, below the 3.7% CPI rate
Falling mortgage interest costs helped keep living-cost increases for New Zealand households below the headline inflation rate in the year to September 2026, offsetting a sharp rise in petrol prices.
Stats NZ’s household living-costs price indexes (HLPIs) show living costs for the average household rose 3.0% over the 12 months, easing from 3.2% in the year to June. That compares with annual inflation of 3.7% measured by the consumers price index (CPI).
Why interest payments matter
The gap between the two measures comes down to how they treat housing. The HLPIs include mortgage interest payments, which make up a large share of many household budgets. The CPI leaves them out and instead includes the cost of building a new home.
Interest payments for the average household fell 10.3% over the year, the main reason living-cost inflation ran below the CPI.
“Interest payments for the average household fell around 10% over the past year, while the cost of building a new home increased 3.2% over the same period,” Stats NZ prices and deflators spokesperson Nicola Growden (pictured) said.
For mortgage advisers, the data captures the benefit borrowers have gained from refixing at lower rates over the past year. That relief may narrow from here, with the Reserve Bank of New Zealand having lifted the official cash rate in July and September and most bank economists expecting further increases.
That shift is already under way, as borrowers coming off fixed terms are now refixing at higher rates. Reserve Bank figures cited by Cotality show one- and two-year special rates averaged 4.97% and 5.27% in September, against 4.80% on existing fixed loans. Around 54% of mortgages by value are due to reprice within a year, although some may still refix lower in the short term.
Petrol drives the rise
Fuel was the main source of pressure. Petrol prices rose 19.1% over the year and accounted for almost a quarter of the increase in living costs for the average household.
“Higher petrol prices were the main contributor to the increase in living costs across each household group in the 12 months to the September 2026 quarter,” Growden said.
Electricity prices rose 9.3% and local authority rates 6.2%, adding further pressure. Fuel looks set to keep inflation elevated in the near term, with the Reserve Bank forecasting annual inflation of 4.4% in the December quarter, largely because of fuel prices.
Superannuitants face the steepest increase
The burden fell unevenly. Superannuitant households recorded the highest annual increase of any group, at 4.0%, as they are more likely to own their homes and so face rising local authority rates. Rates accounted for around 13% of the rise in their living costs. Higher-spending households had the lowest increase, at 2.5%.
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