Tuesday, August 17, 2010

Up, up and away? For some.

Tony Abbott is on to something. Campaigning on the cost of living, he has repeatedly suggested it's climbing faster than the rate of inflation.

New figures from the Bureau of Statistics show he is right. While not increasing at the 10 per cent rate the Coalition sourced from Channel Nine early in the campaign, for many Australians it is climbing faster than the official inflation rate of 3.1 per cent.

The surprise is they are not the Australians they used to be. Until the June Living Cost Indexes released yesterday the Australians squeezed the most by high prices appeared to be those on the pension, on benefits and on superannuation.

The new indexes, construed to measure changes in the prices of the things households actually spend their money on, show the most squeezed are those with a breadwinner.

A low 2 per cent per annum back in March the living cost index for employee dependent households is now climbing at 4.5 per cent.

Mortgages make the difference. Excluded from the consumer price index but included in the living cost indexes, they climbed in March, April and May adding to rather than subtracting from the living costs as they had been doing when they were falling...

Mortgage payments and insurance matter twice as much to the budgets of employee households as they do to pensioners.

Petrol is also far more important in the budgets of working-age households and climbed strongly over the year.

Electricity, water and gas jumped in price 18, 14 and 10 per cent over the year, but have dented the budgets of working families far less than those of aged pensioners who find them 50 per cent more important and Australians on benefits for whom they are twice as important.

Age pensioners probably have the least to be worried about as their payments are increased each March and September in line with either the official inflation rate or their own cost of living index or increases in male wages, whichever is the greatest.

Australians on unemployment benefits have the most to lose from higher prices, suffering a 4.2 per cent increase in their cost of living the past year, but getting indexation at only the inflation rate of 3 per cent.

Once close to the pension, the NewStart unemployment allowance has slipped to two-thirds of the pension as a result of the different treatment. Projections by the Australia Institute suggest if the different treatment continues it will be worth one-half of the pension by 2050.

Self-funded retirees are the least hit by higher prices. The Bureau says they are benefiting form cheaper Australian holidays, cheaper overseas holidays, and cheaper pharmaceuticals.

Inflation: Worse for some

Annual living cost increase

Employee households: 4.5%
Welfare beneficiaries: 4.2%
Age Pensioners: 3.3%
Self-funded retirees: 3.0%

Consumer Price Index 3.0%

ABS 6463.0

Published in today's SMH and Age

Related Posts

. Coalition outsources economic statistics to Channel Nine

. Does Tony Abbott know the price of cheese? Or bread? Or...

. Are prices climbing? That depends on who you are

6463.0 6467.0