Living costs for Employee households, that is households where the principal source of income is wages and salaries, rose 3.2 per cent in the December 2022 quarter, according to the latest data from the Australian Bureau of Statistics (ABS). This was the largest quarterly increase in living costs of all household types and was higher than the Consumer Price Index (CPI), which rose 1.9 per cent.
Employee households also recorded the largest annual increase in living costs across all household types and the CPI (9.3 per cent compared to a rise of 7.8 per cent for the CPI). The last time the CPI recorded an annual increase of 9.3 per cent was in 1987.
Last week’s CPI publication showed price changes for all households living in capital cities. Today’s release of the Living Cost Indexes shows how those price changes impact the living costs of different types of households: Employee, Age pensioner, Other government transfer recipient, Self-funded retiree, and Pensioner and beneficiary. The impact of price changes varies between household types due to their different spending patterns.
Michelle Marquardt, ABS head of prices statistics, said: “Employee households have recorded their largest quarterly rise since the September 2000 quarter which followed the introduction of the GST, and the largest annual rise since the series commenced in 1999.”
Employee households were particularly impacted by increases in mortgage interest charges, which make up a higher proportion of overall expenditure for these households compared to the other household types.
“Mortgage interest charges for Employee households rose 26.6 per cent over the quarter, and 61.3 per cent over the year, with banks passing on the Reserve Bank of Australia’s cash rate rises to interest rates for both variable and new fixed rate home loans,” Ms Marquardt said.
Living costs for Self-funded retiree households rose 2.2 per cent this quarter, which was also higher than the CPI and the highest quarterly rise for this series since the September 2000 quarter.
Annually, living costs for Self-funded retirees rose 7.6 per cent, the largest annual increase since the series commenced in 1999.
Self-funded retiree households were more affected by increases in recreation and culture, as holiday travel and accommodation make up a higher proportion of expenditure for these households compared to the other household types. Domestic holiday travel and accommodation prices for Self-funded retirees rose 13.4 per cent due to strong demand over the Christmas holiday period.
All household types saw quarterly increases in their living costs ranging between 1.7 per cent and 3.2 per cent this quarter.
The annual increases in living costs this quarter were the largest seen across all household types since their series commenced (1999 for most household types and 2008 for Pensioner and beneficiary households).
“Annually, food prices rose between 9 and 10 per cent, driven by rises for meals out and takeaway foods, and fruit and vegetables. Utilities prices rose between 8 per cent and 10 per cent, driven by higher wholesale prices for gas and electricity being passed on to consumers,” Ms Marquardt said.