Living Cost Indexes (LCIs) measures the price change of goods and services and its effect on living expenses of selected household types
The SLCI weights are updated each year to ensure the weights used in the SLCI basket reflect contemporary household spending patterns. Previously the weights have been updated each December quarter. Starting from 2024, the SLCI weights will be updated each March quarter.
Insurance and financial services and Alcohol and tobacco were the main contributors to the rise in living costs across all household types this quarter. Housing was also a main contributor for all household types except Self-funded retirees.
The Insurance and financial services group recorded one of the strongest rises across all LCIs this quarter. The rise was due to increases in Mortgage interest charges and Insurance.
Mortgage interest charges rose due to the continued rollover of expired fixed-rate to higher variable rate mortgages, as well as banks passing on the Reserve Bank of Australia’s cash rate rise in November 2023 to variable rate home loans.
Insurance prices rose with higher premiums across motor vehicle, house and home contents insurance reflecting higher reinsurance, natural disaster and claims costs.
Tobacco prices rose due to the flow on effects of the introduction of a 5% annual excise indexation and the usual bi-annual Average Weekly Ordinary Time Earnings (AWOTE) indexation applied on 1 September 2023.
Employee households, whose primary source of income is wages and salaries, rose driven by a rise in Mortgage interest charges. Mortgage interest charges makes up a higher proportion of expenditure for Employee households. Mortgage interest charges rose by 5.4% in the December 2023 quarter, down from 9.3% in the September 2023 quarter.
The rise for Other government transfer recipient households, whose primary source of income is government pensions or benefits (other than the age pension), was driven by a rise in Tobacco which makes up a higher proportion of expenditure for Other government transfer recipient households.
Age pensioner, Other government transfer recipient and PBLCI households recorded higher rises in living costs compared to the September 2023 quarter. This is mainly due to increases in Electricity costs for these households following falls in the September 2023 quarter.
In the September 2023 quarter, Age pensioner, Other government transfer recipient and PBCLI households recorded falls in Electricity due to the introduction of the Energy Bill Relief Fund rebates from July 2023. The rebates reduced electricity bills for these households in all capital cities.
In the December 2023 quarter, the first instalment of the Energy Bill Relief Fund rebates was used up by concession households in Perth, Hobart and Melbourne. This resulted in electricity bills for these households returning to normal levels. The rise in Perth was partially offset by the introduction of the second instalment of the Energy Bill Relief Fund rebates from December 2023.
The rise in Housing costs for these households were partially offset by falls in Rents due to an increase in Commonwealth Rent Assistance (CRA). From 20 September 2023, the maximum rate for CRA increased by 15% on top of the CPI indexation that applies twice a year, reducing out of pocket expenses for eligible households. The September 2023 quarter results showed a partial impact of the CRA changes, with the remaining impact being reflected in the December 2023 quarter.
The smaller rise for Self-funded retiree households, whose primary source of income is superannuation or property income, was due to recording a fall in Housing, as well as Mortgage interest charges and Tobacco making up a lower proportion of expenditure for these households.
Housing costs fell for Self-funded retiree households due to a fall in Electricity. The fall is driven by the introduction of the first instalment of the Energy Bill Relief Fund rebates for newly eligible non-concession households in Sydney, Melbourne, Adelaide, Hobart, Darwin and Canberra, reducing electricity bills for these households.
Over the past twelve months all LCIs rose between 4.0% and 6.9%.
Employee households recorded the largest annual rise in living costs of all the household types, rising 6.9% over the year, down from a peak of 9.6% in the June 2023 quarter.
Mortgage interest charges rose 40.3% over the year, easing from a peak of 91.6% in the June 2023 quarter. Fewer interest rate rises over the September and December 2023 quarters led to the easing in annual growth. However, Mortgage interest charges remain elevated as low fixed rate loans continue to rollover into higher variable rate loans.
The remaining four household types recorded rises between 4.0% and 5.2%. Insurance and financial services, Housing, and Food and non-alcoholic beverages were the main contributors across these household types.
Higher premiums for house, home contents and motor vehicle insurance over the past twelve months have resulted in record annual growth in Insurance across the household types. Rents have also increased over the past twelve months, reflecting tight rental markets across the country. The rises in Rents for these households were moderated by the increases to Commonwealth Rent Assistance.
Among the household types, Insurance and financial services, Housing, and Food and non-alcoholic beverages were the main contributors to the rises in living costs.
| Household type | Main annual contributors |
|---|---|
| Pensioner and beneficiary (PBLCI) | Insurance and financial services (a) (+22.0%) Housing (b) (+3.8%) Food and non-alcoholic beverages (+4.2%) Alcohol and tobacco (+7.9%) |
| Employee | Insurance and financial services (a) (+30.5%) Housing (b) (+8.2%) Food and non-alcoholic beverages (+4.5%) Alcohol and tobacco (+6.5%) |
| Age pensioner | Insurance and financial services (a) (+18.4%) Food and non-alcoholic beverages (+4.1%) Housing (b) (+3.9%) Health (+4.9%) |
| Other government transfer recipient | Insurance and financial services (a) (+25.7%) Housing (b) (+4.6%) Alcohol and tobacco (+8.5%) Food and non-alcoholic beverages (+4.3%) |
| Self-funded retiree | Insurance and financial services (a) (+18.1%) Housing (b) (+6.9%) Food and non-alcoholic beverages (+4.0%) Health (+4.6%) |
For information on the weighting pattern for the SLCIs, please see Selected Living Cost Indexes, Australia methodology and the Annual weight update of the CPI and Living Cost Indexes, December 2022. The weighting pattern has been updated with a partial weight update implemented in the September 2023 quarter.
| Weighted average of eight capital cities | Pensioner and beneficiary LCI (%) | Employee LCI (%) | Age pensioner LCI (%) | Other government transfer recipient LCI (%) | Self-funded retiree LCI (%) | Consumer Price Index (CPI) (%) |
|---|---|---|---|---|---|---|
| Food and non-alcoholic beverages | 0.5 | 0.5 | 0.5 | 0.5 | 0.4 | 0.5 |
| Alcohol and tobacco | 4.0 | 2.7 | 2.9 | 4.6 | 1.9 | 2.8 |
| Clothing and footwear | 1.0 | 0.6 | 0.9 | 1.1 | 0.7 | 0.5 |
| Housing (a) | 1.3 | 1.3 | 1.8 | 1.3 | -0.1 | 1.0 |
| Furnishings, household equipment and services | -1.0 | -0.8 | -1.2 | -0.7 | -1.2 | -1.0 |
| Health | -0.7 | 0.7 | -0.4 | -1.3 | 0.5 | 0.6 |
| Transport | -0.2 | -0.2 | -0.1 | -0.3 | -0.1 | -0.2 |
| Communication | 0.4 | 0.3 | 0.5 | 0.4 | 0.5 | 0.4 |
| Recreation and culture | 0.5 | 0.4 | 0.5 | 0.3 | 0.4 | 0.3 |
| Education | -0.1 | -0.1 | 0.0 | -0.1 | -0.1 | -0.1 |
| Insurance and financial services (b) | 4.5 | 5.0 | 4.1 | 4.9 | 4.2 | 1.7 |
| All groups | 1.0 | 1.1 | 0.8 | 1.1 | 0.5 | 0.6 |
For further analysis on commodity group contributors, please see the latest release of the Consumer Price Index.
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.
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.
This release previously used catalogue number 6467.0.