For superannuitants, the cost of living rose 1.2 per cent in the September quarter. That was more than the increase for any of the 12 other subsets of households for which the statisticians compile living cost indices.

For consumers generally, the main driver of inflation in the latest quarter was petrol prices. But for the 390,000 superannuitant households it was the annual increase in local body rates, which averaged 5.6 per cent.

Another big ticket item for those households, insurance, has risen 6.9 per cent over the past year.


Rates and insurance each represent 7.6 per cent of an average superannuitant household's expenditure, whereas petrol is 3.7 per cent. For all households, rates account for 4.1 per cent of spending and insurance 5.6 per cent.

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These numbers come from Statistics New Zealand's household living-costs price indices (HLPIs).

The weightings given to each of the 700 items in the consumers price index reflect the average New Zealand household's spending, but that masks wide variations between different groups. For example, families in the lowest fifth of the population by income spend much more of their income on food and rent and a smaller proportion on, say, international air travel, than those in the highest-income quintile.

The HLPIs adjust the weightings and, unlike the CPI, also include interest costs which — at least for the third of households paying a mortgage — represent a pretty material part of their spending. So the HLPIs are a more realistic representation of the cost of living than the official inflation rate. Across all households, the rise was 2.2 per cent in the year ended September, while the CPI recorded a 1.9 per cent rise.

The relatively high share of superannuitants' spending going on rates and insurance reflects a higher rate of home ownership than for the population as a whole. Indeed, the level of NZ superannuation payments assumes that by the time people reach the age of eligibility, they will at least own the roof over their head.

That assumption is increasingly challenged by the data.

Ten years ago, 88 per cent of superannuitant households were owner-occupiers, including 5 per cent still paying off a mortgage. By 2017, when the HLPIs were last reweighted, the proportion of owner-occupiers had fallen to 84 per cent, including 8.5 per cent still with a mortgage.


That trend will only get worse as the long-terms effects of the housing crisis play out, with people becoming homeowners much later in life (if at all) and having to get up to their nostrils in debt to do so.

This has long-term fiscal implications. As it is, superannuitants already represent a growing share of people receiving the accommodation supplement — 13 per cent of the total by 2016, up from 9 per cent in 2007 — and of that 13 per cent, more than half were spending over 40 per cent of their income on housing.

In the meantime, for the three-quarters of superannuitants who do own the roof over their heads outright, the cost of living under that roof looks set to keep rising in real terms and as a share of their incomes.

According to the HLPIs, local body rates for superannuitant households have risen 60 per cent over the past 10 years and insurance by 90 per cent.

One reason to expect the cost of house insurance to keep rising is climate change. While some of the adverse impacts of an increasingly inhospitable climate will be borne by individuals who find themselves in harm's way, it is reasonable to expect most of the cost to be socialised, including through insurance pools.

In addition, we have been reminded this week that we live in shaky isles, and the Earthquake Commission's natural disaster fund has been cleaned out so for the first time it has had to call on its Crown guarantee. Therefore, the EQC levy component of homeowners' insurance bills can be expected to rise as well.

Over the past 10 years rates have risen much faster than consumer prices and the population.

As for rates, we can only hope that serious reform will — eventually — flow from the Productivity Commission's review of local government funding.

Over the past 10 years rates have risen much faster than consumer prices and the population.

Indeed, officials' briefing to the incoming Minister of Local Government, Nanaia Mahuta, a year ago pointed out that the compound growth in rates over the past 10 years, per capita, also outstripped growth in per capita GDP, average weekly earnings and an index of local government costs.

Despite that brisk growth in rates, which provide 59 per cent of their operating income on average nationwide, councils are struggling to cover their costs.

The Productivity Commission has yet to produce an issues paper on the matter and its final report is not due until the end of November next year, so any relief for long-suffering ratepayers remains distant and uncertain.

We are left then with a picture of an ageing population and a shrinking proportion of the elderly living in owner-occupied, mortgage-free housing. For those who do, housing costs are relentlessly rising.

The most recent Household Incomes report from the Ministry of Social Development, released last month, tells us that one in every four New Zealanders in the lowest fifth of population when ranked by income before housing costs is 65 or older.

But when housing costs are factored in, the picture improves. One in three of the 65-plus age group are in the second lowest quintile after housing costs, and 13 per cent in the bottom one.

And on another measure of living standards, the material well-being index, 44 per cent of older New Zealanders are in the top quintile. That index reflects the ability to afford 24 items covering the basics such as food, clothes, accommodation, electricity, transport, keeping warm, maintaining household appliances in working order, and so on, and also the freedoms households have to purchase and consume non-essentials that people commonly aspire to.

Only 7 per cent of superannuitants are in the bottom quintile by that measure.

Even so, the fact that we have an acute problem with child poverty that demands attention should not blind us to incipient evidence in the data of an emerging problem of elder poverty down the track.