Pensioner living costs hit by council rate rises

Retirees saw their cost of living lift 1.2 per cent in the September quarter. Photo / Getty Images

Superannuitants faced the highest inflation in the September quarter due to a strong lift in local authority rates.

Retirees saw their cost of living lift 1.2 per cent in the quarter as local authority rates lifted 5.6 per cent, Statistics New Zealand said.

Of the different household groups measured by Stats NZ, superannuitants were hit hardest by rates rises, while beneficiaries were affected least.

"As a proportion of their expenditure, superannuitants spend four times as much on local authority rates as beneficiaries," consumer prices manager Geraldine Duoba said.

"Beneficiary households tend to live in rented homes, so are less likely to be affected by rates increases directly."

In contrast, the top 20 per cent of households by spending saw their cost of living rise only 0.7 per cent in the September quarter. While they were affected by price rises for petrol, vegetables, and local authority rates, those impacts were partially offset by lower mortgage interest payments and lower prices for fruit and telecommunication equipment.

Maori households saw their living costs rise 0.9 per cent, while beneficiaries faced a 0.8 per cent increase in the quarter. Both groups faced the highest annual increase, at 2.4 per cent.

Stats NZ said the biggest contributor to annual inflation for all households in the year through September was higher petrol prices. The only exception was beneficiaries, who were more affected by rent increases.

ASB Bank senior economist Mark Smith notes that during the past 12 months average nationwide petrol prices have surged by more than 40 cents per litre, with prices for diesel up approximately 45 cents per litre.

For the average household, this has likely translated into an additional $14 a week being spent on fuel, he said. He expects higher prices for food, fuel and rising costs to further squeeze household budgets.

"Where possible, we expect households to continue to cut back on fuel use and to generally substitute towards lower cost alternatives for essential purchases," he said.

Stats NZ said that on an annual basis, the bottom 20 per cent of households by spending saw living costs rise 2.2 per cent.

They rose 1.9 per cent for the highest-expenditure household group, which had benefited from a decrease in tertiary education costs resulting from the government's fee-free first-year policy, the agency said.

Households overall faced a 2.2 per cent lift in the annual cost of living, above the consumer price index which rose at an annual pace of 1.9 per cent in the three months to September 30.