New data reveals true depth of New Zealand's cost of living crisis as household spending jumps

New data has revealed the true depths of the cost of living crisis with New Zealanders on average spending 8.2 percent more in the past year. 

The data, which was released on Thursday by Stats NZ, shows the cost of living for the average household increased by 8.2 percent in the 12 months to December 2022. 

The cost of living is top of mind for most New Zealanders as the country grapples with high inflation, rising interest rates and price hikes for nearly everything.

Each quarter, the household living-costs price indexes (HLPIs) measure how inflation affects 13 different household groups, plus an all-households group. It's different from the consumer price index (CPI) which measures how inflation affects New Zealand as a whole.

Annual inflation, as measured by the CPI, was 7.2 percent, while inflation for the average household, measured by the HLPIs, was 8.2 percent. 

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.

The newly released HLPIs data shows interest payments increased by 45 percent for the average household in the past year. 

And those higher interest payments are the main contributor to increases for the highest-spending households in the country, with their cost of living jumping 9.4 percent in the year to December 2022. 

The data shows the highest-spending households in the country spend more on interest payments compared to other households. 

For the lowest-spending households, food and rent were the biggest drivers of their 7.1 percent increase.

"This [increase] was driven by higher prices for rent, grocery food, interest payments, and fruit and vegetables," Stats NZ consumer prices manager James 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."

For the lowest-spending households, overall food prices increased 11 percent, grocery food prices increased 10 percent, and fruit and vegetable prices increased a whopping 21 percent.

Beneficiaries also experienced an increase with their cost of living jumping 6.9 percent, mainly driven by rent, higher interest payments, food and fresh groceries. 

Rent makes up about a third of beneficiary household spending, the data shows. This compares with 13 percent for the average household and 5 percent for the highest-spending households.

The same factors were also the biggest contributors to an 8.1 percent increase in living costs for Māori households in the 12 months to December 2022.

The main contributors to higher living costs for Māori were interest payments, rent, grocery food, and fruit and vegetables.

In 2022, prices for Māori for interest payments increased 45 percent, rent increased 5.4 percent, grocery food increased 10 percent and fruit and vegetables increased 20 percent.

Meanwhile, superannuants' increase in living costs was driven by grocery food, fruit and vegetables, and passenger transport services - such as international and domestic airfares. 

Their cost of living increased by 7.4 percent overall in the year to December 2022.