Annual living cost increase highest for Employee households

Living costs for employee households rose 6.9 per cent in the year to the December 2023 quarter, according to the latest data from the Australian Bureau of Statistics (ABS).

Michelle Marquardt, ABS head of prices statistics, said: “Increases in annual living costs ranged from 4.0 per cent to 6.9 per cent depending on the expenditure patterns of the different household types, compared to a rise of 4.1 per cent in the Consumer Price Index (CPI) in 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 per cent in the June 2023 quarter.

“Conversely, Self-funded retiree households experienced a smaller increase in their living costs than other households or the CPI.”

Insurance and financial services, Housing and Food and non-alcoholic beverages were the main contributors to annual living cost rises across the household types.

Increases in annual insurance prices ranged from 16.6 per cent to 17.3 per cent and were the highest rises for insurance on record amongst the household types.

“Higher insurance premiums across house, home contents and motor vehicles contributed to the increase in living costs for all household types over the year.

“Higher prices for Rents, reflecting a tight rental market, and Meals out and takeaway foods also contributed to rises in living costs,” Ms Marquardt said.

A significant difference between the Living Cost Indexes and the CPI is that the Living Cost Indexes include Mortgage interest charges rather than the cost of building new dwellings.

Employee households were most impacted by rising Mortgage interest charges, which are a larger part of their spending than for other household types. Self-funded retirees were the least affected as they tend to own their own house and are therefore less affected by increases in either mortgage interest charges or rents.

“Mortgage interest charges rose 40.3 per cent annually, down from a peak of 91.6 per cent 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,” Ms Marquardt said.

Quarterly living costs highest for Employee and Other government transfer recipient households

Employee households recorded one of the largest quarterly rises in living costs of all household types with a 1.1 per cent increase this quarter. Mortgage interest charges were the most significant contributor to the rise.

Living costs for Other government transfer recipient households also rose 1.1 per cent in the quarter. Tobacco prices make up a higher proportion of spending for these households compared to the other household types. Tobacco prices rose 7.0 per cent, following the introduction of the 5 per cent annual tobacco excise indexation and biannual Average Weekly Ordinary Time Earnings increase. These were both applied on 1 September 2023.