New Zealand households experienced a divergence in inflation rates throughout 2025, with beneficiaries and superannuitants bearing a disproportionately higher cost-of-living increase compared to larger spenders, according to data released by Statistics New Zealand (Stats NZ). While the average household saw a 2.4 percent increase in living costs over the 12 months ending in September 2025, those on NZ Superannuation faced a 3.9 percent rise, and beneficiaries experienced a 3.4 percent increase.
The disparity stems largely from shifts in mortgage interest payments. The average New Zealand household experienced a cost-of-living increase of 2.4 percent over the previous 12 months, less than the overall inflation rate of 3 percent. This difference is attributed to a significant 15.4 percent drop in mortgage interest payments, which benefited higher-spending households who are more likely to have mortgages. Those households saw an annual inflation rate of just 0.8 percent.
The data, released in the September quarter, highlights a reversal of trends observed after the COVID-19 pandemic. Previously, rising home loan rates impacted lower-income households more severely. Now, with interest rates declining, the burden of inflation has shifted towards those less likely to benefit from mortgage relief – namely, beneficiaries and superannuitants.
Rent, a substantial component of expenditure for beneficiaries, is a key driver of this disparity. Rent increased by 2.6 percent over the year to September. For beneficiaries, rent constitutes 29.5 percent of total household expenditure, significantly higher than the average household’s 13.1 percent and the 5.1 percent for highest-spending households. This makes beneficiaries particularly vulnerable to increases in rental costs.
The overall inflation experienced across all households in the September 2025 quarter was 0.8 percent, as reported by Stats NZ. However, this figure masks the uneven impact across different income groups.
Craig Renney, policy director at the Council of Trade Unions and a former advisor to then-Finance Minister Grant Robertson, noted that historically, those with the lowest incomes have experienced the highest rates of cost-of-living increases. He suggests that the current situation, where administered costs are rising faster than general inflation, is likely to persist. These administered costs include rates, electricity, and healthcare expenses – areas where lower-income households spend a larger proportion of their income.
The challenges faced by pensioners and beneficiaries are described as “surviving, not living” in recent reports, underscoring the financial strain they are experiencing. The data released in February confirms that this pressure continued into the latter part of 2025.
The impact of rising costs on these vulnerable groups is particularly concerning given the broader economic context. While the average household benefited from falling mortgage rates, those reliant on fixed incomes or benefits are struggling to keep pace with increasing prices for essential goods and services. The data suggests a need for targeted support measures to mitigate the disproportionate impact of inflation on beneficiaries and superannuitants.
The trend of rising administered costs – rates, electricity, and healthcare – is expected to continue exerting pressure on household budgets, particularly for those with limited financial flexibility. This suggests that the current divergence in inflation rates is not a temporary anomaly but a structural issue that requires ongoing attention from policymakers.
