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NZ beneficiaries hit hardest by rising rents, petrol prices

Thursday 26th July 2018

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Rising rents, high power bills and more expensive petrol fell most heavily on New Zealand's beneficiaries in the June quarter, with those receiving government support facing the fastest inflation in the period. 

Consumer prices for beneficiaries rose 0.5 percent in the three months ended June 30 for an annual pace of 2.1 percent, Statistics New Zealand's household price index shows. That compares to a quarterly pace of 0.4 percent and annual increase of 1.9 percent for all New Zealanders. That imposition of higher prices for beneficiaries was due largely to a 0.7 percent rise in rental prices, at a time when the major cities are facing tighter rental markets. A 3.2 percent increase in fuel prices and a 1.7 percent rise in electricity prices also weighed more heavily on the vulnerable group. 

"With rent making up almost 30 percent of household expenditure for beneficiaries, rent increases this quarter affected this group more than any other household group," Stats NZ consumer prices manager Geraldine Duoba said in a statement.

The period ends just before the government's families package comes into effect, increasing working for families tax credits, the accommodation supplement and introducing winter payments with a view to reducing child poverty rates. 

A recent Motu Economics Public Policy and Research paper found increases in housing allowances have led to small rental increases, with a third of an increase in the accommodation supplement absorbed by higher rents. The paper's authors said they couldn't determine to what extent the increased supplement meant renters could spend more freely on housing, potentially reducing crowding, or if it let landlords hike rents. 

Today's data show Māori faced the smallest price increases in the June quarter at 0.2 percent, while superannuitants and middle-income families and low-spending households faced inflation of 0.3 percent. 

Duoba said cheaper subscriber television kept a lid on inflation for all households, in a period when Sky Network Television slashed its fees as it faces mounting competition from online streaming rivals. "However, it was the superannuitants and lowest-spending households that received the greatest benefit,” she said.

Third quintile households with moderate spending and fourth quintile households with higher-than-average incomes faced the most annual inflation at 2.2 percent, as they contended with higher petrol prices, steeper mortgage payments and more expensive cigarettes and tobacco. 

The lowest income and highest spending households faced the smallest annual inflation at 1.8 percent.


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