Higher cigarette and tobacco prices hit Māori and beneficiary households the most in the March 2020 quarter, Stats NZ said today.
Each quarter, the household living-costs price indexes calculate how inflation affects different groups in society, while the consumers price index (CPI) measures price changes for New Zealanders as one group.
Prices for cigarettes and tobacco rose 11 percent in the CPI this quarter as the annual tobacco tax rise took effect on 1 January .
"The cost of cigarettes and tobacco was one key contributor to inflation for all household groups," consumer prices manager Sarah Johnson said.
"Māori and beneficiary households felt the effect of this rise more than the other household groups we measured, partly because cigarettes and tobacco made up a greater proportion of their expenses."
Cigarettes and tobacco made up more than 4 percent of all expenses for beneficiary and Māori households, compared with less than 3 percent for all households as a group.
| Household group | Percentage |
| Māori | 4.8 |
| Beneficiaries | 4.1 |
| Expenditure quintile 2 | 3.3 |
| Expenditure quintile 1 (lowest-expenditure households) | 3 |
| Expenditure quintile 3 | 2.9 |
| All households | 2.5 |
| Expenditure quintile 4 | 2.2 |
| Superannuitant | 1.3 |
| Expenditure quintile 5 | 1.1 |
Rent prices also rose in the March 2020 quarter.
Rent made up more than 30 percent of beneficiary households' expenses compared with about 11 percent for all households.
Higher rent and cigarette and tobacco prices saw beneficiary households experiencing the highest inflation in the March 2020 quarter (up 1.4 percent). This compared with a 0.8 percent rise for all households.
Annual increase in cost of living for lowest-spenders reaches near 9-year high
In the year to the March 2020 quarter, inflation increased 3.1 percent for the lowest-spending households, the largest increase for this group since September 2011. In contrast, inflation increased 1.6 percent for the highest-spending households over the year.
"Rent increased 3.7 percent in the CPI for the year, but households experienced rent increases differently," Mrs Johnson said.
See Consumers price index: March 2020 quarter for more information on annual and quarterly price increases.
The lowest-spending households felt rising rental costs more over the year (up 4.6 percent). This compared with a 3.8 percent rise in rent for the highest-spending households.
This difference between household types was mainly due to how much each group spends on rent.
The lowest-spenders' rent costs made up more than 18 percent of their expenses. This compared with about 4 percent for the highest-spenders, who did not feel the impact of rent rises as much.
| Household group | Percentage |
| Beneficiaries | 32.7 |
| Expenditure quantile 1 (lowest-expenditure households) | 18.2 |
| Māori | 16.8 |
| Expenditure quantile 2 | 15.5 |
| Expenditure quantile 3 | 11.7 |
| All households | 11.4 |
| Expenditure quantile 4 | 7.6 |
| Superannuitant | 5.1 |
| Expenditure quantile 5 (highest-expenditure households) | 4.2 |
The annual rise in the cost of living for the highest-spending households was lower compared with the lowest-spending households. This is partly because highest-spenders received a greater benefit from the interest rate falls on their mortgage after cuts in the official cash rate (OCR).
"Mortgage interest payments make up about 1 in every 12 dollars of spending for highest-spending households, compared with about 1 in every 100 dollars of spending for the lowest-spending households," Mrs Johnson said.
The OCR fell three times in the March 2020 year. The latest change was on 16 March 2020.
"Our monthly survey collection for mortgage interest rates didn't fully capture the latest fall as we collected most of the data from banks before that," Mrs Johnson said.
Food prices drive inflation in quarter
In the March 2020 quarter, rising food prices were the biggest driver of inflation for both the lowest- and highest-spending households.
"The cost of food is usually the main contributor to inflation for most of the household groups we look at each quarter," Mrs Johnson said.
"Many households spent an average of about 20 percent of their living costs on food."
The rise in food prices for most of the household groups was partly offset by price drops in payments for primary and secondary schools.
In the March 2020 quarter, payments for primary and secondary education fell 10 percent for the lowest-spending households and rose 1.2 percent for the highest-spending households.
Lower-spending households benefitted more from the government policy where public primary and secondary schools in deciles 1-7 received $150 from the government in lieu of charging voluntary donations. The scheme contributed to falling prices for payments for primary and secondary education for all expenditure groups except the highest-spending households.
In the March 2020 quarter, inflation rose 1.1 percent overall for the lowest-spending households, compared with a 0.4 percent rise for the highest-spending households.
