The rise in living costs has decelerated for all household types, according to fresh figures from ABS.
Employee households experienced a 0.6% increase in living costs this quarter, marking the smallest increase since September 2021 and a drop from last quarter's 1.3% increase.
Other household types also saw the smallest increase since 2020.
Michelle Marquardt (pictured above), ABS head of prices statistics, said that employee households are more affected by rising mortgage interest charges.
“Employee households continued to experience higher living cost increases than other households because they are more impacted by rises in mortgage interest charges,” Marquardt said in a media release.
Although the Reserve Bank’s cash rate stayed steady this quarter, mortgage costs rose due to the shift of fixed-rate mortgages to variable rates and higher mortgage debt.
Lower electricity and fuel costs helped offset rising mortgage interest charges, particularly for employee households.
The recent Commonwealth Energy Bill Relief Fund and state rebates in Queensland, Western Australia, and Tasmania lowered electricity bills. Employee households, who didn’t qualify for earlier rebates, saw a 20% drop in electricity costs, compared to a 10% reduction for government-supported households.
Self-funded retirees and age pensioner households experienced the smallest living cost increases this quarter at 0.3%, down from last quarter’s 1.2%.
While these households were affected by some general price changes, certain items had a unique impact.
Self-funded retirees, for instance, faced higher travel costs, while age pensioner households benefitted from reduced health costs due to reaching the PBS pharmaceutical safety net threshold.
Over the past year, employee households saw the highest increase in living costs, with a 4.7% rise largely due to mortgage interest charges. This contrasts with self-funded retirees, who experienced the smallest increase at 2.8%.
“Mortgage interest charges for Employee households rose 18.9% annually, continuing the slowdown since the peak of 91.6% in the June 2023 quarter,” Marquardt said.
All household types saw lower annual increases in living costs compared to the June quarter.
Self-funded retirees had the lowest increase, while other households experienced annual rises between 3.5% and 4.4%, with higher costs driven by increased insurance premiums, rent, and food prices.
These were partially offset by annual declines in electricity and fuel prices, ABS reported.
For more details, see Selected Living Cost Indexes, Australia.
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