Household Living Costs Increase 2.2 Percent

The cost of living for the average New Zealand household increased 2.2 percent in the 12 months to the December 2025 quarter, according to figures released by Stats NZ today.

The 2.2 percent increase, measured by the household living-costs price indexes (HLPIs), follows a 2.4 percent increase in the 12 months to the September 2025 quarter.

After peaking at 8.2 percent in the 12 months to the December 2022 quarter, HLPI growth has continued to ease, returning to levels last seen in June 2021, when it was 2.5 percent.

Meanwhile, inflation - as measured by the consumers price index (CPI) - was 3.1 percent in the 12 months to the December 2025 quarter, following a 3.0 percent increase in the 12 months to the September 2025 quarter. The most recent CPI high was 7.3 percent, recorded in the 12 months to the June 2022 quarter.

The HLPIs measure how inflation affects 13 different household groups, plus an all-households group (an average household). In contrast, the CPI measures how inflation affects New Zealand as a whole.

HLPIs include interest payments (mortgage, credit cards, and other interest) while the CPI includes the cost of building a new home.

Consistent with the previous quarter, a fall in interest payments was the main contributor that kept the cost of living for the average household (as measured by the HLPI) lower than the overall inflation rate measured by the CPI.

"Interest payments fell 17.3 percent for the average household over the past year, while the cost of building a new home increased 1.2 percent over the same period," prices and deflators spokesperson Nicola Growden said.

The latest data for the year to December 2025 shows differences in how inflation has been experienced by various household groups.

Superannuitant households experienced the highest inflation rate at 3.8 percent. The main contributor was local authority rates which increased 8.8 percent. This contributed nearly one-fifth of their overall inflation. Electricity, which increased 12.1 percent, and health insurance, which increased 20.3 percent, were the other key contributors to their latest increase.

"Superannuitants are more likely to own their own homes and not have a mortgage. Higher prices for local authority rates have more impact on superannuitants than on other household groups," Growden said.

Among superannuitants, 85.7 percent own their home and 8.5 percent have a mortgage.

The impact of local authority rates was lower for beneficiary and Māori households. For beneficiary households, rates contributed 6.3 percent of their annual inflation rate of 3.1 percent. For Māori households, rates contributed 11.0 percent of their annual inflation rate of 2.2 percent.

The 12.1 percent annual rise in electricity prices had more impact on lower expenditure households - electricity contributed nearly one-quarter of their annual inflation rate of 3.7 percent. Beneficiary households were similarly affected, with electricity contributing one-fifth of their annual inflation rate of 3.1 percent.

"Most households rely on electricity for their daily needs. Changes in electricity prices will impact households differently depending on how much of their expenditure goes towards their monthly power bill," Growden said.

Health insurance prices increased 20.3 percent in the 12 months to December 2025 quarter. This increase had a greater impact on superannuitants, with health insurance contributing 9.3 percent of their inflation rate of 3.8 percent. For higher-expenditure households, health insurance contributed one-third of their annual inflation rate of 0.8 percent. Superannuitants have a higher proportion of their household expenditure on health insurance than other household groups.

The highest-spending households recorded the lowest inflation rate at 0.8 percent. The main contributor was an 18.6 percent decrease in mortgage interest payments.

Among highest-spending households, 82.3 percent own their home and 57.2 percent have a mortgage. Since these households spend a higher proportion of their expenditure on interest payments, particularly mortgage interest, falling interest rates have kept their living cost increases comparatively low.

Rent increased 1.9 percent over the year and was the main contributor to rising living costs for beneficiary households. Rent contributed 18.4 percent of their annual inflation rate of 3.1 percent. Māori households were similarly affected, with rent contributing 17.3 percent of their annual inflation rate of 2.2 percent.