Selected Living Cost Indexes, Australia

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Living Cost Indexes (LCIs) are designed to measure the effect of changes in prices on the out–of–pocket living expenses of selected household types

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Reference period
December 2020
Released
3/02/2021
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Key statistics

Weighted average of eight capital cities, All groupsSep Qtr 2020 to
Dec Qtr 2020
% change		Dec Qtr 2019 to
Dec Qtr 2020
% change
Selected Living Cost Indexes (LCIs) - Household type:  
 Pensioner and Beneficiary LCI (PBLCI)

0.5

 0.7

 Employee LCI

0.8

-0.5

 Age pensioner LCI

0.1

 0.4
 Other Government Transfer Recipient LCI

0.9

 0.8
 Self-funded Retiree LCI 0.6 0.8
Consumer Price Index (CPI)0.9 0.9

In the December 2020 quarter, all five living cost indexes rose:

  • Tobacco was the main contributor for three of the five population sub-groups due to the annual excise tax increase of 12.5% and the bi-annual excise tax increase based on Average Weekly Ordinary Time Earnings (AWOTE) indexation, both applied on 1 September 2020.
  • This was followed by domestic holiday travel and accommodation increasing across all population sub-groups following the re-opening of state and territory borders and commencement of the peak summer holiday period.

What's new this quarter

An article was published on 14 January 2020 explaining the impact of COVID-19 on the December quarter CPI and Selected Living Cost indexes:

This issue includes the introduction of updated weighting patterns: 

Main contributors to change

Percentage change, Commodity group -September Quarter 2020 to December Quarter 2020
Weighted average of eight capital citiesPensioner and beneficiary LCIEmployee LCIAge pensioner LCIOther government transfer recipient LCISelf-funded retiree LCIConsumer Price Index (CPI)
       
Food and non-alcoholic beverages 0.1 0.2 0.1 0.1 0.2 0.2
Alcohol and tobacco 6.4 4.0 4.4 7.3 2.6 4.2
Clothing and footwear-1.5-0.9-1.6-1.4-1.7-1.0
Housing (a)-1.3-1.4-1.6-1.1-1.2-0.6
Furnishings, household equipment and services 1.4 4.7-0.7 3.5-0.5 3.4
Health-0.7 1.5-0.4-1.6 1.2 1.3
Transport 0.6 0.9 0.7 0.6 0.8 0.9
Communication-0.4-0.4-0.3-0.4-0.3-0.4
Recreation and culture 1.3 1.7 1.6 1.0 2.2 1.6
Education 1.6 1.4 0.1 1.6 0.3 1.2
Insurance and financial services (b)-0.2-1.1 0.3 0.1 0.3 0.1
All groups 0.5 0.8 0.1 0.9 0.6 0.9

(a) New dwelling purchase by owner-occupiers are included in the CPI but excluded from the Selected Living Cost Indexes.
(b) The Selected Living Cost Indexes includes interest charges and general insurance. Interest charges are excluded from the CPI and general insurance is calculated on a different basis.



 

Alcohol and tobacco

  • Rose across all households due to increases in tobacco prices, driven by the 12.5% annual excise indexation and bi-annual Average Weekly Ordinary Time Earnings (AWOTE) increase on 1 September.

Recreation

  • Rose across all households due to increases in domestic holiday travel and accommodation following the re-opening of state and territory borders and commencement of the peak summer holiday period. 

Furnishings, household equipment and services

  • Three household types recorded rises due to child care, following the end of the 'Early Childhood Education and Care Relief Package' and out-of-pocket expenses returning to pre-COVID levels. For more information on child care see Update to measuring the CPI in the December 2020 quarter.
  • Partially offsetting the rise was non-durable household products, which fell due to a return to regular discounting on products such as toilet paper and body washes as prices fell from elevated levels.

Housing

  • Fell across all household types due to a decrease in electricity. The fall in electricity was due to a $600 household electricity credit introduced on 1 November by the Western Australian State government, resulting in a significant fall in the price of electricity in Perth (-66.7%).

Population sub-groups

At the All groups level, differences across the population subgroups quarterly movements are largely explained by the weight of child care, tobacco and electricity.

Annually, the most significant price rises were food and non-alcoholic beverages and alcohol and tobacco, partially offset by falls in automotive fuel and mortgage interest charges. Mortgage interest charges are excluded from the CPI. 

Comparison of weights for selected components
 Child careElectricityTobaccoMortgage interest
Quarterly movement (%) 37.7 (a)-7.510.9-2.1
Annual movement (%)2.4-9.219.9-15.1
                              Weight for each population sub-group (%)
 Child careElectricityTobaccoMortgage interest
CPI1.292.573.96(b)
Employee households1.642.524.066.52
Age pensioner households0.003.983.320.93
Other government transfer recipient households0.953.879.252.31
Self-funded retiree households0.003.112.590.58
Pensioner & beneficiary households0.523.916.541.67

(a) For more information on child care see Update to measuring the CPI in the December 2020 quarter.
(b) Mortgage interest not included in the CPI.



 

Pensioner and beneficiary households (+0.5%)

  • Living costs for pensioner and beneficiary households recorded a smaller rise than employee households due to these households having a lower expenditure weight for child care, which saw out-of-pocket expenses return to pre-COVID levels in the December quarter.
  • Falls in electricity and pharmaceutical products partially offset the rise. Pharmaceutical products fell due to the cyclical effect of the PBS safety net, as increased number of patients reach the PBS safety net threshold, thus reducing their out-of-pocket expenses. 
  • Over the past twelve months the PBLCI rose 0.7% due to price rises in food and non-alcoholic beverages (+2.5%) and alcohol and tobacco (+12.7%). Falls in automotive fuel (-16.9%) and mortgage interest charges (-15.3%) partially offset the rise. Mortgage interest charges fell due to reductions in fixed and variable interest rates. 

Employee households (+0.8%)

  • Living costs for employee households recorded the second largest rise of all households due to having the highest expenditure weight for child care. Child care out-of-pocket expenses returned to pre-COVID levels, following the cessation of free child care on 13 July.
  • Falls in electricity and mortgage interest charges partially offset the rise. Mortgage interest charges fell following recent reductions in fixed and variable interest rates.
  • Over the past twelve months the LCI for employee households fell 0.5% due to falls automotive fuel (-16.7%) and mortgage interest charges (-15.1%). Employee households was the only population sub-group to fall annually.

Age pensioner households (+0.1%)

  • Living costs for age pensioner households recorded the smallest rise of all households due to having no expenditure weight for child care.
  • Falls in electricity and pharmaceutical products partially offset the rise.
  • Over the past twelve months the LCI for age pensioner households rose 0.4% due to rises in food and non-alcoholic beverages (+2.5%) and alcohol and tobacco (+9.6%). Falls in automotive fuel (-16.9%), electricity (-10.1%) and pharmaceutical products (-3.3%) partially offset the rise. 

Other government transfer recipient households (+0.9%)

  • Living costs for other government transfer recipient households recorded the largest increase of all households due to having a higher expenditure weight for child care and tobacco. 
  • Falls in electricity and pharmaceutical products partially offset the rise.
  • Over the past twelve months the LCI for other government transfer recipient households rose 0.8% due to rises in alcohol and tobacco (+14.1%) and food and non-alcoholic beverages (+2.5%). A fall in automotive fuel (-17.1%) partially offset the rise. 

Self–funded retiree households (+0.6%)

  • Living costs for self–funded retiree households recorded a smaller rise compared to employee households due to having no expenditure weight for child care.
  • A fall in electricity partially offset the rise.
  • Over the past twelve months the LCI for self–funded retiree households rose 0.8% due to rises in food and non-alcoholic beverages (+2.4%) and alcohol and tobacco (+6.8%). A fall in automotive fuel (-16.6%) partially offset the rise. 

Data downloads

Table 1. All groups, index numbers and percentage changes, by household type

Data files
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Table 2. Commodity groups, index numbers, percentage changes and points contributions, by household type

Data files
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Table 3. Gross insurance, mortgage interest and consumer credit, index numbers and percentage changes, by household type

Data files
Download xls [130.5 KB]

Use of price indexes in contracts

Price indexes published by the Australian Bureau of Statistics (ABS) provide summary measures of the movements in various categories of prices over time. They are published primarily for use in Government economic analysis. Price indexes are also often used in contracts by businesses and government to adjust payments and/or charges to take account of changes in categories of prices (Indexation Clauses).

Use of Price Indexes in Contracts that sets out a range of issues that should be taken into account by parties considering including an Indexation Clause in a contract using an ABS published price index.

Frequently asked questions

The Frequently Asked Questions page that has answers to a number of common questions to do with price indexes and the Consumer Price Index, in particular.

Previous catalogue number

This release previously used catalogue number 6467.0.

Methodology

Selected Living Cost Indexes, Australia methodology, December 2020