Falling interest rates benefit high spenders

For highest-spending households, falling mortgage interest rates helped offset price rises in the September 2020 quarter, Stats NZ said today.

As a result, quarterly inflation for highest-spending households was flat at 0.0 percent, while local authority rates and payments have affected superannuitants the most.

In the September 2020 quarter, quarterly inflation rose 0.4 percent for all households. Each quarter, the household living-costs price indexes calculate how inflation affects 13 different groups, while the consumers price index calculates how inflation affects New Zealanders as a whole.

“The highest-spending households benefited the most from the recent drop in interest rates, helping offset rising local authority rates,” consumer prices manager Nicola Growden said.

“Interest payments make up about one dollar in every ten of this household group’s spending.”

As an indication of how much interest rates have fallen, spending on interest payments by all household types fell 6.4 percent from the June 2020 to September 2020 quarters, and decreased 10 percent compared with a year ago.

Annual inflation also lowest for highest spenders

In the year to September 2020, inflation for the highest-spending households was 0.2 percent, about a quarter of the rate faced by all households of 0.8 percent.

The rate of annual inflation faced by the highest-spending households has been slowing down since September 2018, when it was 1.9 percent for the year.

“Annual inflation for the highest-spending households has been consistently the lowest of any household group for the past four years,” Mrs Growden said.

Local authority rates push up inflation for superannuitants

Increases in local authority rates affected superannuitants the most in the September 2020 quarter.

In the September 2020 quarter, local authority rates and payments rose 3.1 percent across all households.

“More superannuitants tend to own their own homes, so this group is most affected by higher council rates than other groups who are more likely to rent,” Mrs Growden said.

In the September 2020 quarter, inflation for superannuitants rose 0.7 percent and 1.3 percent for the year.

/Stats NZ Public Release. View in full here.