Cost of Living starts to catch CPI

Today’s release by the ABS of the Cost of Living Indexes show that the cost of living is starting to more closely reflect the measure of inflation (as measured by CPI). In previous quarters we have seen cost of living increases for most households holding well below the rate of inflation; that picture is now beginning to shift.

The Cost of Living Indexes are designed to answer the question “By how much would after tax money incomes need to change to allow households to purchase the same quantity of consumer goods and services that they purchased in the base period?” They consider this question for a variety of household types (given the different expenditure patterns of households). The results for Q1 are as follows:-

q/q y/y
Q4 Q1 Q4 Q1
Pensioner & beneficiary 0.5 1.1 2.4 3.0
Employee 0.4 0.7 1.3 2.1
Age Pensioner 0.6 0.9 2.5 3.0
Other Govt Transfer Recipient 0.6 1.1 2.5 3.1
Self-funded retiree 1.0 0.3 2.6 2.9
Headline CPI  0.8 0.6 2.7 2.9

The employee household group (the bulk of everyday Aussies) are facing cost of living pressures which remain below the rate of inflation, but that they are starting to increase sharply. All other groups are now seeing cost of living increases at, or slightly higher than, headline CPI.

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