Poor reports on poorest households

Things may not always be quite as they seem at first glance.

Stuff: Poorest Kiwi households face much larger cost of living increases than big spenders

A recent jump in the cost of living hit the lowest paid Kiwis much harder than the big spenders, new figures show.

In the first three months of the year, inflation for all households jumped 1 per cent, bringing annual inflation to 2.2 per cent, the highest since 2011.

On Thursday Statistics New Zealand released the household living-costs price indexes, giving a breakdown of how price increases hit different groups.

The figures showed that the rise hit the lowest earners the hardest. Beneficiaries saw their overall costs rise by 1.4 per cent, almost three times the increase faced by the 20 per cent of households with the highest spending.

That sounds like a significant disparity for poor households. But what comes next changes the perspective somewhat.

While overall inflation rose partly because of increases in the cost of fuel and food, Statistics New Zealand said inflation was especially high for beneficiaries because a greater proportion of their income went on tobacco. Each January, the excise on tobacco products increases by 10 per cent.

So inflation went up more for poor households that used a significant amount of tobacco.

Whether tobacco taxes should keep going up is another matter.

But one of the key pieces of information about households was not revealed until well into the item.

“Higher costs for cigarettes and tobacco had a greater effect on beneficiaries,” Statistics New Zealand’s Nicola Growden said.

“About 5 per cent of their spending went up in smoke, proportionally more than most other types of households spent.”

Predominantly Maori households faced a 1.3 per cent increase in inflation – higher than average – while superannuitant households faced a 0.9 per cent increase, slightly below average.

Maori are over represented in poorer households, and also smoke much more than non-Maori.

And superannuitants are also less likely to be smokers as they don’t die as young.

Meanwhile Labour’s finance spokesperson Grant Robertson put out this on the same topic.

Cost of Living increases hit those with least the hardest

Posted by on May 04, 2017

Beneficiaries, superannuitants and people on the lowest incomes continue to bear the brunt of higher inflation, according to the latest data from Statistics NZ, says Labour Finance spokesperson Grant Robertson.

So he’s also referring to the latest inflation data from Statistics New Zealand.

“Since National came to office (December 2008) inflation for those on the lowest 20 per cent of incomes has increased by 17 per cent. But for those with the highest 20 per cent of incomes, it has increased by only 10 per cent.

“The cost of core inflation items like food, fuel and rates are all soaking up an increasing chunk of the incomes of the lowest paid people. These are costs that Kiwis can’t avoid – and they are rising faster than other costs in the economy.

No mention of one of the most significant factors, tobacco use and tax.

“High housing costs, rising rents are all eclipsing the mediocre wage increases for New Zealanders. Yesterday the latest wages data showed that 67 per cent of Kiwis got a pay rise of less than inflation, which means they effectively are working harder for less.

“Rather than address these problems National doesn’t have a plan for the economy, to help boost our notoriously low productivity, nor to help Kiwi families.

“Only a Labour-led Government will help address the growing cost of living crisis in New Zealand for low income Kiwis and we’ll deliver the shared prosperity that all New Zealanders deserve,” says Grant Robertson.

Robertson either didn’t pick up on the tobacco part of the statistics, or he deliberately left it out of his post.

But the Stuff item quoted him in their article, and also managed to, eventually, highlight the impact of tobacco on poorer households.