Petrol spikes offset mortgage relief

Household living costs in New Zealand edged up by 3% in the year ended September 2026, a slight improvement from the 3.2% rate recorded in the previous quarter. The increase was driven primarily by a sharp rise in fuel prices, which partially offset the financial relief provided by falling mortgage rates.

Petrol prices surged 19% over the 12 months to September 2026, acting as the main driver of the cost increase for all household groups. This fuel hike accounted for approximately one-quarter of the total rise in average household living costs, according to Stats NZ.

Mortgage interest payments for the average household declined by 10% during the same period, providing a counterbalance to the higher fuel expenses. While the cost of constructing a new home increased by 3.2%, the reduction in interest payments helped soften the overall impact on household budgets.

Other essential costs also contributed to the rise, with electricity prices up 9.3% and local body rates up 6.2%. The household living cost measure differs from the consumer price index, which rose 3.7% in the September quarter, because the living cost index includes interest payments while the CPI excludes them.

Superannuitants experienced the highest annual cost increase at 4%. This group, which often owns homes free of mortgages, faced higher local authority rates that accounted for roughly 13% of their total cost increase, despite benefiting from lower interest rates.

For beneficiaries, living costs rose by 3%, while costs for Māori households increased by 3.1%. Income levels also influenced the rate of increase, with low-earning households facing a 3.4% rise compared to 2.7% for high-income households.

Spending patterns further differentiated the impact, with high-spending groups seeing a notable rise driven in part by higher international airfares. These figures reflect the varied pressures on different demographic and income segments within the national economy.