Businesses have also been experiencing higher prices. The Producer Price Index (PPI), which measures inflation at the wholesale level, peaked at 8.7% in March 2022 – well above the December 2019 level of 2.0%. Higher business input costs also drive increases in consumer inflation, as businesses pass costs onto consumers.

At the same time, most businesses are expecting some easing in costs (and subsequently the prices they pass on to consumers) over the next three months according to the latest ANZ business outlook.

While living costs have surged for Aucklanders in recent years, there is some encouragement. Earnings and average household incomes have largely kept pace with inflation since 2019. This was not the case during the GFC in 2008-09. In the year to March 2024, Aucklanders’ average household income grew at a faster rate (6.1%) than inflation (4.0%).

These rising incomes help offset the impact on some Aucklanders of increasing prices. For example, despite the aforementioned increase in rental costs, rent has actually decreased, as a proportion of the average household income, since 2019. This is not the case for homeowners, however, with mortgage payments increasing as a proportion of income.

International comparisons suggest that Auckland is a relatively expensive city to live in. While incomes have increased to (at least partly) offset higher costs of living, Auckland’s overall income levels are lower than many comparable international cities. That is, while affordability may not have gotten significantly worse in recent years, it is starting from a relatively unaffordable base. The Mercer Cost of Living Survey ranks Auckland as the 111th most expensive city in the world, with Wellington slightly lower at 139th.