Petrol Price Hike Drives NZ Household Living Costs Up 3.2%

The cost of living for New Zealand households rose by 3.2% over the past year, up from 2.1% in the previous quarter. The main driver behind this increase was a 27.5% rise in petrol prices, which accounted for nearly a third of the annual increase in living costs.

According to Stats NZ's household living-costs price indexes (HLPIs), higher petrol prices had the largest impact on lower-spending households, as they make up a larger proportion of their expenditure. The increase in petrol prices was linked directly to supply disruptions tied to the Middle East conflict that began at the end of February.

The Reserve Bank's recent 25 basis point hike to the OCR from 2.5% may not be good news for households, as it could lead to higher interest payments. However, falling interest payments softened the overall impact of the increase in living costs, with the household living-costs measure remaining well below the Consumers Price Index (CPI).