Pensioners experience higher increases in living costs
Annual increases in living costs ranged between 3.8 per cent for Employee households and 4.9 per cent for Age pensioner households in the March 2022 quarter, according to data released today by the Australian Bureau of Statistics (ABS).
The increase in living costs for Age pensioner households is the highest since the September 2006 quarter.
Head of Prices Statistics at the ABS, Michelle Marquardt, said living costs for Age pensioner households were particularly impacted by increases in food and non-alcoholic beverages, as grocery food items make up a higher proportion of overall expenditure for Age pensioner households compared to other types of households.
“These households were also more affected by increases in housing costs, as they have relatively higher expenditure levels on utilities, maintenance and repair, and property rates.
“Automotive fuel and food prices contributed to higher living costs for all Australian households, with fuel prices increasing by around 35 per cent and food prices rising by more than four per cent in the past 12 months.”
Last week’s Consumer Price Index (CPI) publication showed price changes for all households in capital cities. The Living Cost Indexes show how those changes in prices 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 can vary between household types due to their different spending patterns, with the Living Cost Indexes also showing how changes in mortgage interest charges are impacting households' living costs.
The annual rise in the CPI was higher than any of the Living Cost Indexes because the CPI measures changes in prices of new dwellings. The Living Cost Indexes, on the other hand, measure changes in mortgage interest charges, which fell over the past 12 months.
"While housing prices have been increasing, many households switched their mortgages to lower interest rate fixed loans and, as a result, mortgage interest charges fell over the last year. Interest charges account for almost six per cent of expenditure for Employee households, compared to around one to two per cent for other households.
“Mortgage interest charges for Employee households fell 5.4 per cent over the year. Consequently, Employee households had the lowest annual increase of all the different household types at 3.8 per cent,” Ms Marquardt said.
In the March 2022 quarter, Age pensioner (+2.3 per cent) and Other government transfer recipient (+2.1 per cent) households recorded the largest quarterly rises since the September 2000 quarter, following the introduction of the goods and services tax (GST).
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- The Consumer Price Index and Selected Living Cost Indexes are measured similarly, however, different methods are used to measure owner-occupied housing. This article explains how owner-occupied housing is measured in the CPI and SLCIs: The measurement of housing in the Consumer Price Index (CPI) and Selected Living Cost Indexes (SLCIs).
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