Higher rises in living costs for Employee households

Employee households recorded the largest increase in living costs of all household types in the September quarter (2.6 per cent compared to a 1.8 per cent increase for the Consumer Price Index), according to data released today by the Australian Bureau of Statistics (ABS). This was the largest quarterly increase in Employee households’ living costs since the September 2000 quarter, which followed the introduction of the GST. 

All household types saw increases in their living costs equal to or higher than the Consumer Price Index (CPI) for the first time since the March 2018 quarter. 

Head of Prices Statistics at the ABS, Michelle Marquardt, said that last week's CPI publication showed price changes for all households living in capital cities. 

"Today’s release of the Living Cost Indexes shows how those changes in prices have impacted the living costs of different types of households: Employee, Age pensioner, Other government transfer recipient, Self-funded retiree, and Pensioner and beneficiary," Ms Marquardt said.  

"The impact of price changes varies between household types due to their different spending patterns. The Living Cost Indexes also show how changes in mortgage interest charges, rather than the cost of building a new dwelling, are impacting households' living costs."

Employee households were particularly impacted by increases in Mortgage interest charges. Mortgage interest charges for Employee households rose 24.2 per cent over the quarter, with banks passing on the Reserve Bank of Australia's recent cash rate rises to interest rates for both variable and new fixed rate home loans. Mortgage interest charges make up a higher proportion of overall expenditure for Employee households compared to other household types.

The annual increases in living costs this quarter were the largest seen across all household types since their series commenced (1999 for most household types and 2008 for the Pensioner and beneficiary households). Employee households also had a larger annual increase, 6.7 per cent, in living costs than the other household types, which increased between 6.3 and 6.5 per cent. Mortgage interest charges for Employee households rose 25.3 per cent over the year, reflecting both higher interest rates and higher mortgage debt levels.

"Higher food and automotive fuel prices in the past 12 months contributed to higher living costs for all household types. Annually, food prices rose between 9 and 10 per cent across the household types, driven by fruit and vegetables, while fuel prices rose around 18 per cent”, Ms Marquardt said. 

Other housing related costs such as utilities also contributed to higher living costs for all household types. Utilities prices rose between 4 and 7 per cent across the household types, in the past 12 months. Annual price reviews for gas and electricity saw higher wholesale prices passed on to consumers in the September 2022 quarter.

The annual rise in the CPI was higher than that of any of the Living Cost Indexes. This was mainly due to large price rises for new dwellings which are included in the CPI but not the Living Cost Indexes. Conversely, the Living Cost Indexes include changes in Mortgage interest charges, which have been falling on an annual basis for the past 3 years. The annual rise in Mortgage interest charges this quarter is the first since the June 2019 quarter.