2nd February 2023 – (Wellington) Increasing prices continued to affect all household groups in the 12 months to December 2022, New Zealand’s statistics department Stats NZ said on Thursday.
The cost of living for the average household, as measured by the household living-costs price indexes (HLPIs), increased by 8.2 percent in the 12 months to December 2022.
“Higher prices for housing, food, and transport were the main contributors to the increase across all household groups,” consumer prices manager James Mitchell said.
Each quarter, the household living-costs price indexes measure how inflation affects 13 different household groups, plus an all-households group. The consumer price index (CPI) measures how inflation affects New Zealand as a whole, Mitchell said, adding the all-households group, or the average household represents all private New Zealand-resident households.
Annual inflation, as measured by the CPI, was 7.2 percent in the December 2022 quarter, while annual inflation for the average household as measured by the HLPIs was 8.2 percent.
The two measures of inflation are typically used for different purposes. A key use of the CPI is monetary policy, while the HLPIs is to provide insight into the cost of living for different household groups, Mitchell said.
One important difference between the two is the treatment of housing. The CPI captures the cost of building a new home, while the HLPIs capture mortgage interest payments, he said.
In the HLPIs, interest payments increased by 45 percent for the average household in the year to December 2022. In the CPI, the cost of building a new home increased by 14 percent in the same period, statistics show.
Meanwhile, the official cash rate, used by the Reserve Bank to control inflation, increased from 0.75 percent in December 2021 to 4.25 percent in December 2022.
“This is reflected in the HLPIs by higher costs for interest payments,” Mitchell said.
Highest-spending households’ cost of living increased 9.4 percent in the year to December 2022. This is the highest annual increase of all the household groups. The main contributor to this was higher interest payments, because highest-spending households spend more of their expenditure on interest payments than other household groups, he said.
The cost of living for lowest-spending households was 7.1 percent in the 12 months to December 2022, statistics show.
This was driven by higher prices for rent, grocery food, interest payments, and fruit and vegetables, Mitchell said.
“Lowest-spending households spend proportionally more on grocery food, fruit and vegetables, and meat, poultry and fish, and proportionally less on restaurant meals and ready-to-eat food than the average household,” he said.
For the lowest-spending households, overall food prices increased 11 percent. Grocery food prices increased 10 percent, and fruit and vegetable prices increased 21 percent, according to Stats NZ.