Māori and beneficiary households were most impacted by high cigarette and tobacco prices in the last quarter, according to Statistics NZ data released today.
Consumer prices manager Sarah Johnson said in the March 2020 quarter, the rise in prices of tobacco products by 11 per cent in the consumer price index (CPI) was “one key contributor to inflation for all household groups”. CPI measures price changes for New Zealanders as one group.
“Māori and beneficiary households felt the effect of this rise more than the other household groups we measured, partly because cigarettes and tobacco made up a greater proportion of their expenses,” she said.
Ms Johnson said cigarettes and tobacco made up more than 4 per cent of all expenses for beneficiary and Māori households, compared with less than 3 per cent for all households as a group.
There was an 11.46 per cent increase in tobacco excise from January 1 this year, which contributed to the rise in prices.
A typical pack of cigarettes retails nearly $40, on average.
At the time, Deputy Prime Minister Winston Peters said: “The excise increase disproportionately gouges the poor.”
He added: “Studies show that the automatic tobacco excise increases are having less effect on reducing smoking rates, most particularly amongst the target groups of Māori and Pasifika.”
Nearly one-third of Māori smoke, compared to about 14 per cent of New Zealand Europeans, according to the Cancer Society.
Food prices drive inflation in quarter
Meanwhile, Ms Johnson said rising food prices were the biggest driver of inflation for both the lowest- and highest-spending households.
“Many households spent an average of about 20 percent of their living costs on food,” she said.
Rent prices on the rise, disproportionately impacts lower-income households
Rent prices in the last quarter made up more than 30 per cent of beneficiary households’ expenses. For all households as a group, this figure was 11 per cent.
This contributed to the highest annual increase in the cost of living for the lowest-spending households in nine years.
Ms Johnson said higher rent and cigarette and tobacco prices saw beneficiary households experiencing the highest inflation at a 1.4 per cent increase in the quarter. This compared with a 0.8 per cent rise for all households.
“Rent increased 3.7 per cent in the CPI for the year, but households experienced rent increases differently,” she said.
Statistics New Zealand uses household living-costs price indexes to calculate how inflation affects different demographic groups.
In the year to the March 2020 quarter, inflation increased 3.1 per cent for the lowest-spending households, the largest increase for this group since September 2011. Inflation increased by 1.6 per cent for the highest-spending households over the year.
The lowest-spending households felt rising rental costs more over the year (up 4.6 per cent) as rents make up more than 18 per cent of their expenses. This compared with a 3.8 per cent rise in rent for the highest-spending households, where rent makes up about 4 per cent of expenses.
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