Household living costs cool, but mortgage repayments, insurance bite

Interest repayments were the largest contributor to household living costs, rising 26.7% in the 12 months to the June 2024 quarter. Photo / NZME

Higher mortgage repayments and insurance costs drove household inflation up 5.4% in the year to the June quarter, Stats NZ said today.

But there is good news as household living costs continue to cool off from a peak of 8.2% in the 12 months to the December 2022 quarter.

The household living costs price indexes (HLPIs) for the 12 months to the June 2024 quarter also came in lower than the 6.2% recorded in the previous quarter (March 2024), according to Stats NZ.

Driving living costs higher in the June quarter were interest repayments (+26.7%), insurance (+18%), and private transport supplies and services (such as fuel), which rose 13%.

The HLPIs measure how inflation affects 13 household groups, plus an all-households group.

The key difference with the HLPIs is that it includes interest repayments, whereas the consumer price index (CPI) includes the cost of building a new home. The CPI measures how inflation affects New Zealand as a whole rather than household groups.

“Mortgage interest payments remain high, and continue to make a significant contribution to living costs for many households,” Stats NZ’s consumer prices manager James Mitchell said.

In contrast, the cost of building a new home increased 3% in the same period.

The cost of living for Maori households increased 5.5% in the 12 months to the June quarter, after a 6.3% rise in the March quarter.

Interest repayments (+26.4%), private transport supplies and services (+13.4%) and rent (+5.2%) were the largest contributors to higher costs.

The latest CPI data shows inflation is falling back towards the Reserve Bank’s target of 1-3%.

Inflation was 3.3% in the year to June 30, compared with a 4% rate in the 12 months to the March 2024 quarter.