Living costs for employee households in Australia saw a significant increase of 1.5 per cent in the June 2023 quarter, as reported by the Australian Bureau of Statistics (ABS).
According to Michelle Marquardt, the head of prices statistics at ABS, all household types experienced living cost rises equal to or higher than the Consumer Price Index (CPI). The impact of these price changes varied among household types due to their different spending patterns.
The rise in living costs for the June 2023 quarter ranged from 0.8 per cent to 1.5 per cent, with employee households experiencing the most substantial increase among all household types.
The increase in living costs was driven by higher prices for insurance, food, and housing across all household types. Insurance premiums for house, house contents, and motor vehicle insurance saw an uptick. The cost of meals out, takeaway foods, and fruit and vegetables contributed to the rise in food expenses. Additionally, strong demand for rental properties amid a tight rental market led to an increase in housing costs.
Annually, all household types experienced higher living costs, primarily driven by increased food and utilities prices. Food prices rose between 7 and 8 per cent, with notable increases in meals out, takeaway foods, and fruit and vegetables. Utilities prices saw a surge between 12 per cent and 14 per cent due to higher wholesale prices for gas and electricity being passed on to consumers.
Employee households experienced the largest annual rise in living costs, with a significant increase of 9.6 per cent. This rise was mainly influenced by soaring mortgage interest charges, which make up a larger portion of their spending compared to other household types. Mortgage interest charges rose by 91.6 per cent over the year, reflecting the impact of the Reserve Bank of Australia’s cash rate increases and the shift from expired fixed-rate mortgages to higher-rate variable mortgages.
The rise in living costs for employee households in the June 2023 quarter is the largest increase since the series began in 1999. This level of increase in living costs had not been recorded for employee households since 1986.
The Living Cost Indexes, which include mortgage interest charges, showed annual living cost increases ranging from 6.3 per cent to 9.6 per cent, exceeding the 6.0 per cent annual increase in the Consumer Price Index.
The Australian government’s pensions, including the age pension, saw an annual increase of 7.0 per cent in living costs. Housing costs, apart from mortgage interest charges, accounted for a larger proportion of spending for pensioner and beneficiary households, leading to higher living costs for these groups.