Living costs, year to June
Working families: 0.7%
Age Pensioners: 0.7%
Self-funded retirees: 0.7%
Newstart and other benefits: 1.3%
Consumer Price Index: 1.2%
The government statistician has a sobering message for Australians who think their own personal rates of inflation are way in excess of the official rate of 1.2 per cent. It’s that they are probably much lower.
Living cost indexes released yesterday by the Bureau of Statistics show that among so-called working families average costs climbed just 0.7 per cent in the year to June. A year earlier they had been soaring at an annual rate of 4.5 per cent.
Driving down the rates of inflation actually experienced by working households have been dramatic slides in mortgage interest rates, more than enough to offset higher electricity and gas charges. Mortgage payments are around 50 per cent more important to household budgets than energy charges. The ABS includes them in its calculation of household living costs but not in its measure of inflation.
Households headed by aged pensioners and self-funded retirees also experienced extraordinarily low cost increases in the year to June, each also recording 0.7 per cent, roughly half the official inflation rate and the lowest increase since such costs were first calculated in 1999. Sharp falls in the price of food explain the divergence, food being more important in the budgets of retiree households than it is in the calculation of the consumer price index.
Only one type of household identified by the Bureau experienced a cost increase above the official inflation rate... Households headed by “government transfer recipients” such as unemployed Australians on NewStart experienced an annual cost increase of 1.3 per cent, slightly above the official inflation rate of 1.2 per cent that will be used to adjust their benefits, meaning they will left further behind when their benefits are next adjusted in September.
Households headed by beneficiaries spend a greater proportion of their incomes on rent and alcohol and tobacco than other Australians, leaving them more exposed to strongly rising prices.
A spokesman for Treasurer Wayne Swan welcomed the Bureau’s calculations saying they showed most Australians were experiencing very low rates of inflation. A family with a $300,000 mortgage was paying around $4,000 per year less than when the Coalition was last in office.
Shadow treasurer Joe Hockey said the prices of essentials such as electricity, education, healthcare and rents were climbing strongly.
“All Australians use electricity,” he said. “Electricity prices are up more than 10 per cent over the past year, and up over 60 per cent since Labor came to power. This is before the carbon tax which will hit electricity prices starting from next quarter’s data.”
The latest Melbourne Institute survey finds Australians expect inflation to jump to 3.3 per cent as a result of the carbon tax. The Reserve Bank expects the increase to be a one-off with no implications for interest rates.
In today's Canberra Times and Age
. The good news we won't believe. Inflation is extraordinarily low
. Want to see underlying inflation of just 1.95 per cent?
. Getting inflation wrong