Poor New Zealanders’ cost-of-living rises the fastest

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By Leith van Onselen

Statistics New Zealand has today released its Household Living Costs Price Indexes, which reveals that low-income households’ costs are growing at a much faster rate than high-income households:

Living costs for low-spending households increased 2.6 percent in the year to September 2017, Stats NZ said today. This was 1.1 percent more than for high-spending households (up 1.5 percent).

Poorer households experienced a greater impact from increased prices for rents, insurance, and cigarettes and tobacco. In contrast, high-spending households experienced more benefit from decreased prices for telecommunications services, and audio visual equipment.

“Prices increased over the year for essential items like rents, food, and petrol, while they fell for some luxury items,” consumer prices manager Matthew Haigh said.

“Households with more discretionary income have received the most benefit from cheaper high-tech products”…

You can see from the above chart that cost of living pressures for low-income households have exceeded those of high-income households for most of the past decade. In fact, since June 2008, lower-income households’ cost-of-living has risen by 19%, versus just 12% for higher-income households.

This story plays nicely with the new Labour-led Coalition Government’s inequality agenda.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.