Petrol prices rise 19.1%, driving household living costs up 3%

Liam Dann and Tom Raynel discuss the spending squeeze, struggling retailers and hospitality businesses, and the pressures facing small business owners on The Economy of Everything.

Data has confirmed what many Kiwis already know – life’s getting more expensive.

The cost of living for the average New Zealand household rose 3% in the past year, mainly due to increased petrol prices, according to figures released by Stats NZ today.

The increase in the 12 months to the September 2026 quarter – measured by the household living-costs price indexes (HLPI) – followed a 3.2% increase in the 12 months to June 2026 quarter.

Higher petrol prices were the main contributor to the increase in living costs across each household group in the 12 months to the September 2026 quarter, prices and deflators spokeswoman Nicola Growden said.

“Petrol prices rose 19.1% over the period, accounting for almost one-quarter of the increase in the annual average household inflation rate.”

Inflation, as measured by the consumers price index (CPI), was 3.7% in the 12 months to the September 2026 quarter, following a 4.1% increase in the 12 months to the June 2026 quarter.

Rising petrol prices had the biggest impact on New Zealand's increasing cost of living in the past year, according to Stats NZ.

Consistent with recent quarters, falling interest payments were the main contributor to keeping the cost of living for the average household – as measured by the HLPI – below the overall inflation rate measured by the CPI, Growden said.

“Interest payments for the average household fell around 10% over the past year, while the cost of building a new home increased 3.2% over the same period.”

The price of power and local authority rates also contributed to the increase in the annual average household inflation rate.

Electricity prices were up 9.3%, and local authority rates were up 6.2%, she said.

The higher power prices hit lower-spending households hardest.

“Electricity made up 7.4% of their expenditure, compared with 4% for the average household and 2% for higher-spending households.”

Rising local authority rates had the biggest impact on superannuitant households, as pensioners were more likely to own their own home.

Rates accounted for about 13% of the increase in living costs for superannuitant households in the 12 months to the September 2026 quarter, Growden said.

“Superannuitant households experienced the highest annual inflation rate at 4%.”

International airfares rose in the last year, especially to Europe and Asia, according to Stats NZ figures.

Meanwhile, more expensive international airfares had the largest impact on higher-spending households, as international travel made up a larger proportion of their expenditure, she said.

International air transport prices for the average household increased 12.5% in the 12 months to the September 2026 quarter.

“This increase was mainly driven by higher airfares to Europe and Asia.”

Domestic airfares saw an increase of 8.5% in the same period.

For higher-spending households, international airfares contributed around 14% of their annual inflation rate of 2.5% – the lowest annual inflation rate of all household groups.

“Only petrol made a larger contribution to the annual increase in living costs for higher-spending households … around 19%.

“By comparison, international airfares contributed 4.9% of the increase in annual living costs for the average household and 0.6% for lower-spending households.”