Falling interest rates slow up inflation for New Zealand highest spenders

Source: Xinhua| 2019-10-24 11:20:49|Editor: Shi Yinglun
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WELLINGTON, Oct. 24 (Xinhua) -- Falling mortgage interest rates helped stabilize inflation for highest-spending households, while rising council rates have hit superannuitants the hardest, New Zealand's statistics department Stats NZ said on Thursday.

In the September 2019 quarter, highest-spending households faced the lowest quarterly inflation of 0.4 percent, compared with 0.7 percent for all households, Stats NZ said.

A fall in mortgage interest payments in the quarter helped offset rising local authority rates for the highest spenders, it said.

"Mortgage interest rates dropped this quarter, influenced by a cut in the Official Cash Rate," consumer prices manager Sarah Johnson said in a statement.

"Highest-spending households benefited the most from the drop-in interest rates. Mortgage interest payments make up about 1 dollar in every ten of this household group's spending," Johnson said.

As an indication of how much interest rates are falling, spending on mortgage interest payments by all household types fell 2.7 percent from the June 2019 to September 2019 quarters, and decreased 6.2 percent compared with a year ago, she said.

The rate of annual inflation faced by the highest-spending households has been slowing down since September 2018, when it was 1.9 percent for the year, statistics showed.

"In the year to September 2019, inflation for the highest-spending households was 0.7 percent, about half the rate faced by all households," Johnson said, adding annual inflation for the highest-spending households has been consistently the lowest of any household group for the past three years.

Housing costs, especially local authority rates and rents, were key drivers for inflation for all households in the September 2019 quarter, Stats NZ said, adding across all household types, local authority rates and payments rose around 5 percent in the September 2019 quarter.

"More superannuitants tend to own their own homes, so this group is most affected by higher council rates than other groups who are more likely to rent," Johnson said.