Low inflation is helping New Zealand households get ahead, and wages, on average, continue to rise faster than the cost of living, Finance Minister Bill English says.
But Green finance spokeswoman Julie Anne Genter said low oil prices meant the consumer price index was hiding the cost of housing, especially rental housing in Auckland, which was rising much faster than wages and other prices.
Inflation was 0.4% for the year to March 2016, according to figures released by Statistics New Zealand today. Inflation for the March quarter was 0.2%. Both figures were in line with Reserve Bank forecasts.
Much of quarterly increase was driven by tobacco products, which rose 9.4% after an increase in excise duty in January. Food prices were up 1.2% in the quarter, but were down 0.4% over the whole year.
Lower oil prices contributed to the low cost-of-living increase. Petrol prices fell 7.7% in the first three months of 2016, after a 5.7% fall the previous quarter.
Mr English said New Zealand was in the unusual situation of having solid economic growth, more jobs and rising wages at the same time as very low interest rates and inflation.
‘‘This is helping New Zealand families get ahead. Households with mortgages have the double benefit of low cost-of-living rises and lower mortgage servicing costs, which will be particularly welcome in regions with increasing house prices.''
Since the start of 2012, the average annual wage had increased by more than 10% to $57,800, considerably faster than inflation which had been only 3.1%, he said.
An additional 175,000 jobs have been created over the past three years, with a further 173,000 expected by 2020.
‘‘Overall, New Zealand is doing well and New Zealanders are reaping the benefit of a growing economy,'' Mr English said.
Ms Genter said low inflation made it more likely the Reserve Bank would cut the official cash rate again soon, which could just pour more fuel on the housing crisis fire.
‘‘If your rent is going up 5% but you're one of the almost 50% of New Zealanders who did not get a pay rise last year, overall low inflation isn't going to help you.''
National's failure to fix the housing crisis meant New Zealanders were stuck between a rock and a hard place. Lower interest rates could help boost the productive economy but could also cause even more housing cost problems, she said.
