Beneficiaries hardest hit by inflation in Q1 as cigarette costs rise

Beneficiaries were the hardest hit by inflation in the first quarter of this year, as they felt the impact of higher costs for cigarettes and tobacco.

Overall costs for beneficiaries rose 1.4 percent in the March 2017 quarter, compared with the December 2016 quarter, according to Statistics New Zealand. The agency began publishing the quarterly data in November last year to provide new insights into inflation experienced by 13 different groups including beneficiaries, Maori, pensioners and others based on their income and spending patterns.

"Higher costs for cigarettes and tobacco had a greater effect on beneficiaries," Stats NZ consumer prices acting manager Nicola Growden said. "About 5 percent of their spending went up in smoke, proportionally more than most other types of households spent."

Higher rents, which make up one-third of their total spending, also had a greater effect on beneficiaries, she said.

Inflation for households with higher spending rose the least, up 0.5 percent, with the biggest impact coming from an increase in petrol prices. The fall in international airfares and mortgage interest rates in the quarter dampened the overall inflation rise of high-spending households.

Meanwhile, inflation for the lowest-expenditure household group, and for Maori households, rose 1.3 percent in the quarter. Inflation for superannuitants rose 0.9 percent, matching the overall rate for households.

On an annual basis, living costs for low-spending households faced the highest inflation rate of 2.3 percent due to hikes for petrol and rent. That's the highest level of inflation for this group since the June 2014 quarter, Stats NZ said.

Annual inflation for Maori households rose 2.1 percent, impacted by higher prices for petrol, cigarettes and tobacco, and housing rentals, the agency said.

High-spending households experienced a lower rate of annual inflation at 1.6 percent as increases in petrol and cigarettes and tobacco prices had a smaller impact on this group's overall inflation compared with other groups. Meanwhile, prices decreased for package holidays and international air fares, for which high-spending households have more discretionary spending, the agency said.

(BusinessDesk)