Annual inflation in New Zealand is almost three times higher for beneficiaries than other households and it's partly driven by higher rents.
According to Stats NZ, inflation in 2020 for beneficiary households increased by 19.1 percent while overall inflation increased by 0.7 percent, as measured in the household living costs price indexes (HLPIs).
Every quarter HLPIs measure how inflation has affected different groups of people, while the consumer's price index calculates how inflation affects Kiwis as a whole.
Stats NZ found the annual inflation rise for beneficiaries was driven by a 3.6 percent increase to rent prices, whereas all New Zealand households faced a 3.2 percent rent rise.
Housing costs like rent and interest payments account for a large chunk of all Kiwis spending but it varies for different groups meaning price changes affect people differently.
"Beneficiaries spend almost a third of their income on rent on average, so rising rents have a much bigger impact than for all other groups," says Stats NZ consumers prices manager Katrina Dewbery.
"In contrast, beneficiaries spend relatively little on mortgage interest payments so generally don’t benefit from lower interest rates."
Rent takes up 13 percent of spending for all households and 29.7 percent for beneficiaries. For Māori households, it takes up 19 percent, and 7 percent for superannuitants.
TradeMe property spokesperson Logan Mudge told Newshub in December the median rent price across the country was up four percent at $520.
If you're after a typical medium-sized family home as opposed to an apartment it's around $590 per week. Since 2016 the median rent demanded by landlords has risen 21 percent with rent hikes regularly outplacement inflation.
Dewbery says rocketing rent prices have hurt beneficiaries the most, while high-spending households have benefited from falling interest payments.
"For the highest spending households, 9.1 percent of their spending goes to interest payments, so lower interest rates have a bigger impact on this group than all others. This compares with 5.8 percent for all households."
Coordinator of Auckland Action Against Poverty (AAAP) Brooke Stanley Pao says the Stats NZ findings aren't surprising.
"We know that people receiving benefits end up paying a higher proportion of their income than other households for everything because benefits are not sufficient for people to live on comfortably."
She says many people are visiting Work and Income to seek emergency shelter prompting AAAP to demand the Government increase benefits and make public housing a priority.
"We’ve been consistent in calling for benefits to be increased, and toward the end of last year, we were joined by now 70 other frontline and community organisations for the Labour government to do this. She says the government continues to "deny the safety and protection of having enough to live comfortably" by refusing to increase benefits.
"The Labour government needs to get real about being transformational, instead of simply paying lip-service and they have all the power to do this."
Annual inflation for those higher-spending households didn't change in 2020. In contrast, annual inflation for the lowest-spending households has not dropped below 0.1 percent since the start of the HLPI series in 2008.
"For the highest-spending households, this was mainly due to interest payments, down 12 percent, and petrol, also down 12 percent for the year to December 2020," says Dewbery.
There were 389,500 working-age people receiving main benefits including jobseeker support, supported living payments, and sole parent support at the end of December 2020.
Beneficiary households have consistently seen higher inflation rates than all households and for the past 10 years have never seen annual inflation lower than that of all households.
