INDEPENDENT NEWS

Cigarettes spark inflation for most household groups

Published: Mon 14 May 2018 11:04 AM
Price rises for cigarettes and tobacco had the largest impact on inflation for most household groups in the March 2018 quarter, Stats NZ said today.
“Like the March 2017 quarter, prices for cigarettes and tobacco have seen large rises due to the annual tobacco tax increase,” consumer prices manager Geraldine Duoba said. “The tax increase was implemented at the beginning of the year, bringing the average price for a packet of 25 cigarettes up to $35.14.”
Of the different household groups measured, Māori households saw the highest inflation in the March 2018 quarter (up 1.3 percent), compared with 0.8 percent for all households. This increase for Māori households was driven by higher prices for cigarettes and tobacco, and interest payments.
The lowest-spending households experienced more inflation than the highest-spending households in the March quarter, partly because cigarettes and tobacco are a greater proportion of their living costs. Cigarettes and tobacco make up approximately 3 percent of total household living costs for the lowest-spending households, compared to 1 percent for the highest-spending households. Price increases for rent (up 0.7 percent) and petrol (up 2.5 percent) made the next-biggest contributions to price rises for the lowest-spending households.
The introduction of the Government’s new ‘first year free’ policy for tertiary education had a dampening effect on inflation for all households. The highest-spending households received the greatest benefit because they spend proportionally more on tertiary education. These households also experienced the greatest effect from the seasonal price drop in international air transport.
Higher-spending households benefit from cheaper education and airfares
The highest-spending households saw the lowest annual inflation (up 1.4 percent). Their costs were kept lower due to their proportionally higher spending on international airfares and tertiary education, which saw large decreases in the year to March 2018 (down 8.3 percent and 17 percent, respectively). The lowest-spending households, however, experienced higher annual inflation (up 1.8 percent).
The overall costs for Māori households increased 2.0 percent in the year to March 2018, which was driven by increasing prices for cigarettes and tobacco, and rent.
Increasing prices for rent (up 2.4 percent) had the largest effect on inflation for beneficiary households, while annual inflation for superannuitants was driven by price increases for insurance (up 7.9 percent).
Ends
For more information about these statistics:
• Visit Household living-costs price indexes: March 2018 quarter
• See CSV files for download

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