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. This issue includes the introduction of updated SLCI weighting patterns. A key change from this weight update has been an increase in the weight for Mortgage interest charges. For more details see 2024 weight update of the CPI and Living Cost Indexes.
Health, Insurance and financial services and Food and non-alcoholic beverages were the main contributors to the rise in living costs across all household types this quarter.
Prices for Medical and hospital services and Pharmaceutical products rose as a result of the cyclical reduction in the proportion of consumers who qualify for subsides under the Medicare Safety Net and Pharmaceutical Benefits Scheme, which are both reset on 1 January each year.
Insurance and financial services rose due to increases in Mortgage interest charges and Insurance. Mortgage interest charges rose due to the residual impacts from banks passing on the Reserve Bank of Australia’s cash rate rise in November 2023 to variable rate home loans, as well as the continued rollover of expired fixed-rate to higher 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.
Food and non-alcoholic beverage prices rose across all household types, driven by Non-alcoholic beverages and Fruit and vegetables. Non-alcoholic beverages rose due to price increases for soft drinks reflecting higher input costs. Fruit and vegetables rose due to wet weather conditions reducing supply of some vegetables.
Living costs for Employee households, whose primary source of income is wages and salaries, rose 1.7%, up from 1.1% in the December 2023 quarter. The rise is driven by an increase in Mortgage interest charges. Mortgage interest charges makes up a higher proportion of expenditure for Employee households. Mortgage interest charges rose 7.0% in the March 2024 quarter, up from 5.4% in the December 2023 quarter.
Education also contributed to the rise for Employee households this quarter. Education rose 5.8% in the March 2024 quarter, driven by higher school fees for primary and secondary education, as well as tertiary education following the indexation of higher education course fees at the start of the year.
Other government transfer recipient (+1.4%) and Age pensioner (+1.1%) households living costs increased, driven by a rise in Health. The cost of Pharmaceutical products and Medical and hospital services rose due to the cyclical reduction in the proportion of consumers who qualify for subsides under the Pharmaceutical Benefits Scheme (PBS) and Medicare Safety Net, with the safety nets for both resetting from 1 January each year.
Other government transfer recipients and Age pensioner households pay concession prices for Pharmaceutical products and recorded a larger rise from the safety net threshold resetting compared with non-concession households. The PBS co-payment also changed from 1 January 2024 resulting in a larger rise for concession households compared to non-concession households.
The rise in Health costs for these households were partially offset by falls in Electricity due to the second instalment of the Energy Bill Relief Fund rebates in Perth and Melbourne reducing electricity bills for concession households this quarter.
The Pensioner and Beneficiary LCI (PBLCI) recorded a 1.3% rise, up from 1.0% in the December 2023 quarter. The PBLCI measures living costs for Age pensioner and Other government transfer recipient households. These households source their principal income from government payments.
The smaller rise for Self-funded retiree households, whose primary source of income is superannuation or property income, was due to recording a stronger fall for Holiday travel and accommodation compared to the other household types. Holiday travel and accommodation makes up a higher proportion of expenditure for Self-funded retiree households. International holiday travel and accommodation prices fell this quarter due to lower demand following the peak December holiday period.
Self-funded retiree households also have the lowest proportion of expenditure for Mortgage interest charges among the household types, contributing to the weaker rise.
Over the past twelve months, all LCIs rose between 3.3% and 6.5%, with rises in annual living costs easing from the December 2023 quarter for all household types.
Employee households recorded the largest annual rise in living costs of all the household types, rising 6.5% over the year, down from a peak of 9.6% in the June 2023 quarter.
Mortgage interest charges rose 35.3% over the year, easing from a peak of 91.6% in the June 2023 quarter. The Reserve Bank of Australia’s (RBA) decision to keep the cash rate on hold multiple times since July 2023 has 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 annual rises in living costs of between 3.3% and 4.4%. Insurance and financial services and Food and non-alcoholic beverages were the main annual contributors across these household types.
Higher premiums for house, home contents and motor vehicle insurance over the past twelve months have resulted in the highest annual growth in Insurance across most of the household types since the LCIs were first published. Strong rises in Mortgage interest charges over the past twelve months also contributed to the annual rise in living costs across most household types.
Insurance and financial services and Food and non-alcoholic beverages were the main contributors to the rises in living costs across the household types.
| Household type | Main annual contributors |
|---|---|
| Pensioner and beneficiary (PBLCI) | Insurance and financial services (a) (+21.2%) Food and non-alcoholic beverages (+3.3%) Alcohol and tobacco (+7.8%) Transport (+3.7%) |
| Employee | Insurance and financial services (a) (+28.0%) Housing (b) (+6.8%) Food and non-alcoholic beverages (+3.8%) Alcohol and tobacco (+6.2%) |
| Age pensioner | Insurance and financial services (a) (+18.0%) Food and non-alcoholic beverages (+3.2%) Health (+3.4%) Transport (+3.6%) |
| Other government transfer recipient | Insurance and financial services (a) (+24.4%) Alcohol and tobacco (+8.5%) Food and non-alcoholic beverages (+3.5%) Housing (b) (+1.8%) |
| Self-funded retiree | Insurance and financial services (a) (+17.9%) Housing (b) (+4.9%) Food and non-alcoholic beverages (+3.1%) Health (+3.5%) |
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 2023.
| 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 | 0.9 | 0.9 | 0.8 | 1.0 | 0.8 | 0.9 |
| Alcohol and tobacco | 1.0 | 0.9 | 0.9 | 1.0 | 0.7 | 0.9 |
| Clothing and footwear | -0.8 | -1.1 | -0.7 | -1.0 | -0.9 | -1.1 |
| Housing (a) | -0.3 | 0.7 | -1.1 | 0.2 | -0.1 | 0.7 |
| Furnishings, household equipment and services | -0.2 | 0.0 | -0.2 | -0.2 | -0.5 | -0.1 |
| Health | 7.3 | 2.4 | 6.3 | 8.9 | 3.2 | 2.8 |
| Transport | 0.2 | 0.5 | 0.3 | 0.2 | 0.5 | 0.5 |
| Communication | -0.3 | -0.3 | -0.2 | -0.4 | -0.2 | -0.3 |
| Recreation and culture | 0.4 | -0.1 | 0.1 | 0.7 | -0.8 | -0.1 |
| Education | 5.5 | 5.8 | 6.4 | 5.5 | 6.1 | 5.9 |
| Insurance and financial services (b) | 4.8 | 6.1 | 4.1 | 5.5 | 4.3 | 2.0 |
| All groups | 1.3 | 1.7 | 1.1 | 1.4 | 0.7 | 1.0 |
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.