Living Costs Slow for All Australian Households

Employee households experienced their smallest quarterly increase in living costs since the September 2021 quarter while living costs for the remaining household types rose by the smallest amount since 2020, according to the latest data from the Australian Bureau of Statistics (ABS).

Employee households' living costs rose 0.6 per cent this quarter, around half the 1.3 per cent increase last quarter.

Michelle Marquardt, ABS head of prices statistics, said: "Employee households continued to experience higher living cost increases than other households because they are more impacted by rises in mortgage interest charges. While the Reserve Bank of Australia's cash rate remained unchanged this quarter, mortgage interest charges still rose due to the continued rollover of some expired fixed rate mortgages to higher variable rate mortgages and higher mortgage debt levels."

Falls in Automotive fuel and Electricity prices offset the increases in Mortgage interest charges for Employee households. This quarter all households saw reduced electricity prices as the 2024-25 Commonwealth Energy Bill Relief Fund (EBRF) and State Government electricity rebates in Queensland, Western Australia and Tasmania were introduced.

"Most Employee households did not qualify for previous electricity rebates, so the new rebates had a larger impact on their electricity bills. The fall in electricity prices for households receiving government payments was smaller because their bills were already reduced by the 2023-24 rebates. Electricity costs for Employee households fell by 20 per cent compared to households receiving government payments, which fell by around 10 per cent.," Ms Marquardt said.

Age pensioner and Self-funded retiree household living costs rose the least of all household types this quarter, up 0.3 per cent but down from 1.2 per cent in the previous quarter. While changes in prices for most goods and services had a similar impact on these household types, there were some notable differences.

Self-funded retirees were more impacted by increases in Holiday travel and accommodation price increases than other household types but, like Employee households experienced a relatively larger impact from the introduction of the electricity rebates. Age pensioner households had a large fall in Health costs due to more Age pensioner households reaching the PBS pharmaceutical safety net threshold this quarter, reducing their out-of-pocket expenses.

Annually, rises in living costs across all household types were lower than the rises in the June 2024 quarter.

Mortgage interest charges make up a larger proportion of spending for Employee households and a smaller proportion for Self-funded retirees. Correspondingly, Employee households had the largest annual rise in living costs of 4.7 per cent in the 12 months to the September 2024 quarter, while Self-funded retiree households had the lowest annual rise in living costs of 2.8 per cent.

"Mortgage interest charges for Employee households rose 18.9 per cent annually, continuing the slowdown seen since the peak of 91.6 per cent in the June 2023 quarter. This reflects only one rise in the Reserve Bank of Australia's cash rate in the last 12 months, and a slowing in the rollover of expired fixed rate mortgages to higher variable rate mortgages," Ms Marquardt said.

The remaining household types saw annual increases in living costs between 3.5 per cent and 4.4 per cent this quarter, down from between 3.7 per cent and 4.6 per cent in the previous quarter.

Higher insurance premiums, rents and food prices over the last 12 months also contributed to higher annual living costs for all household types. This was offset by annual falls in Electricity and Automotive fuel prices.