Living costs for Australian employee households surged by 6.9% in the year leading up to the December 2023 quarter, according to the latest data from the Australian Bureau of Statistics (ABS).
Michelle Marquardt (pictured), head of prices statistics at ABS, shed light on the dynamics behind these figures, emphasizing that the increase varied between 4.0% to 6.9%, depending on the spending patterns of different household types. She said this spike contrasts with the 4.1% rise observed in the Consumer Price Index (CPI) during the December 2023 quarter.
“Employee households recorded the largest annual rise in living costs, though the rise this quarter has eased from a peak of 9.6% in the June 2023 quarter,” said Marquardt. “Conversely, self-funded retiree households experienced a smaller increase in their living costs than other households or the CPI.”
The uptrend in living costs was chiefly propelled by increases in insurance and financial services, housing, and food and non-alcoholic beverages across various household types. Insurance premiums, scaling between 16.6% to 17.3%, marked the highest recorded increases, according to ABS.
“Higher insurance premiums across house, home contents and motor vehicles contributed to the increase in living costs for all household types over the year,” said Marquardt. “Higher prices for rents, reflecting a tight rental market, and meals out and takeaway foods also contributed to rises in living costs.”
A notable disparity between the Living Cost Indexes (LCIs) and the CPI lies in the inclusion of mortgage interest charges rather than the cost of building new dwellings. Employee households bore the brunt of escalating mortgage interest charges, which constitute a substantial portion of their expenditures compared to other household types. Self-funded retirees, on the other hand, were the least affected as they tend to own their own house, experiencing diminished impact from mortgage interest rate hikes or rent escalations.
“Mortgage interest charges rose 40.3% annually, down from a peak of 91.6% in the 12 months to the June 2023 quarter. While the Reserve Bank of Australia has implemented fewer cash rate increases in recent months, previous interest rate increases and the rollover of some expired fixed-rate to higher-rate variable mortgages continued to contribute to rises,” Marquardt said.
Quarterly living costs peaked notably for employee and other government transfer recipient households, registering a 1.1% increase in the quarter. Mortgage interest charges emerged as the main contributor to this surge. Similarly, living costs for other government transfer recipient households ascended by 1.1%, with tobacco prices accounting for a significant portion of their expenditure.
For more information, click here.
Have something to say about this story? Leave a comment below.
