Annual inflation for beneficiaries was almost three times higher than for all households in the year to December 2020, partly driven by higher rents, Stats NZ said today.
In the year to December 2020, as measured in the household living-costs price indexes, inflation for beneficiary households increased by 1.9 percent, and overall annual inflation increased by 0.7 percent for all households. Each quarter, the HLPIs calculate how inflation affects 13 different groups, while the consumers price index calculates how inflation affects New Zealanders as a whole.
This annual rise for beneficiaries was driven by a 3.6 percent increase to actual rentals for housing. For all households the rise was 3.2 percent.
Housing costs, including rents and interest payments, account for a significant proportion of spending, but it varies for each group. This means that price movements affect each group differently.
| Household group | Actual rentals for housing (percentage) | Interest payments (percentage) |
| Beneficiaries | 29.7 | 2.7 |
| Expenditure quantile 1 (lowest-expenditure households) | 18.1 | 2.5 |
| Māori | 18.9 | 6.2 |
| All households | 13.4 | 5.8 |
| Superannuitant | 7 | 1.3 |
| Expenditure quantile 5 (highest-expenditure households) | 4.9 | 9.1 |
"Beneficiaries spend almost a third of their income on rent on average, so rising rents have a much bigger impact, than for all other groups," consumers prices manager Katrina Dewbery said. "In contrast, beneficiaries spend relatively little on mortgage interest payments so generally don't benefit from lower interest rates."
Rent accounts for 13 percent of spending for all households. For Māori households rent takes up 19 percent, and 7 percent for superannuitants."
Beneficiary households are those that receive government benefits ranging from jobseeker support, supported living payments and sole parent support. There were 389,500 working-age people receiving main benefits at the end of December 2020. See Ministry of Social Development benefit fact sheets snapshot - December 2020 quarter
"For the highest spending households, 9.1 percent of their spending goes to interest payments, so lower interest rates have a bigger impact on this group than all others. This compares with 5.8 percent for all households," Mrs Dewbery said.
"Rising rents have affected beneficiary households most, while highest-spending households have benefitted from falling interest payments."
Annual inflation for the highest-spending households was flat in December 2020, the lowest in four years.
"For this group, overall prices were unchanged from a year before."
In contrast, annual inflation for the lowest-spending households have not been below 0.1 percent in the whole HLPI series, dating back to June 2008.
"For the highest-spending households, this was mainly due to interest payments, down 12 percent, and petrol, also down 12 percent for the year to December 2020. This fall in petrol prices was the same for all households." Mrs Dewbery said.
Beneficiary households have consistently seen higher inflation rates than all households. Over the past 10 years, since December 2010, beneficiary households have never seen inflation lower than that of all households.
| Quarter | All households | Beneficiary |
| Dec-10 | 3.8 | 4.2 |
| Mar-11 | 4.5 | 5 |
| Jun-11 | 5.1 | 5.3 |
| Sep-11 | 4.3 | 4.4 |
| Dec-11 | 1.8 | 1.9 |
| Mar-12 | 1.5 | 1.8 |
| Jun-12 | 0.9 | 1.3 |
| Sep-12 | 0.9 | 1.4 |
| Dec-12 | 1 | 1.6 |
| Mar-13 | 0.9 | 1.5 |
| Jun-13 | 0.9 | 1.5 |
| Sep-13 | 1.6 | 2 |
| Dec-13 | 2 | 2.2 |
| Mar-14 | 1.8 | 1.9 |
| Jun-14 | 2 | 2.1 |
| Sep-14 | 1.5 | 1.6 |
| Dec-14 | 1.2 | 1.4 |
| Mar-15 | 0.9 | 1.1 |
| Jun-15 | 1 | 1.2 |
| Sep-15 | 0.7 | 0.8 |
| Dec-15 | 0.3 | 0.5 |
| Mar-16 | 0.2 | 0.6 |
| Jun-16 | 0.1 | 0.6 |
| Sep-16 | 0.1 | 0.8 |
| Dec-16 | 1 | 1.4 |
| Mar-17 | 1.9 | 2.2 |
| Jun-17 | 1.6 | 2 |
| Sep-17 | 1.9 | 2.3 |
| Dec-17 | 1.8 | 2.4 |
| Mar-18 | 1.7 | 1.9 |
| Jun-18 | 1.9 | 2.1 |
| Sep-18 | 2.2 | 2.4 |
| Dec-18 | 2.1 | 2.2 |
| Mar-19 | 1.3 | 1.8 |
| Jun-19 | 1.5 | 2.1 |
| Sep-19 | 1.3 | 2 |
| Dec-19 | 1.5 | 2.3 |
| Mar-20 | 2.4 | 3.2 |
| Jun-20 | 1.1 | 2 |
| Sep-20 | 0.8 | 2 |
| Dec-20 | 0.7 | 1.9 |
Transport drives up quarterly inflation
In the December 2020 quarter, overall inflation for beneficiary and Māori households rose 0.3 percent, and overall quarterly inflation rose 0.1 percent for all households compared to the September 2020 quarter.
"Quarterly price rises came in the form of used cars and road passenger transport, contributing to higher transport prices for all," Mrs Dewbery said.
"The price rise for used cars has come from both lack of imports available and more demand."
The highest-spending households were affected more by the price rises for used cars, and the lowest-spending households were affected more by road passenger transport, driven by price rises to short-distance bus fares. These rising short-distance bus fare price increases came from bus fare prices returning close to pre-lockdown levels, as many were free for a period during lockdown and remained free until a new 'bee card' was introduced. This card was introduced to nine regions throughout the country.
Māori and beneficiary households also felt the rise of road passenger transport prices more than used car prices.
The higher quarterly transport prices were offset by lower food prices, caused by lower fruit and vegetable prices. These lower prices were mainly due to seasonality.
Superannuitants felt this fall in food prices the most.
Difference between CPI and HLPI
To better understand the differences between the HLPI all groups inflation and the CPI inflation, read Household living-costs price indexes: Background.
