Who’s feeling inflation the most? A glimmer of hope in CPI data for hardest-hit Australians

While rents continued to climb, a 10 per cent increase in the maximum rate for Commonwealth Rent Assistance in September – on top of the usual biannual indexation – reduced the amount of rent paid by eligible recipients.

That helped to push down housing costs by more than 2 per cent for pensioners, with self-funded retirees and others receiving government payments seeing a 2 per cent and 1.7 per cent fall in housing costs respectively. Working households’ housing costs fell by 0.5 per cent.

Cheaper prices at the bowser, largely resulting from weaker global oil prices, also provided relief for households across the board. Urban transport costs fell as state government initiatives discounted public transport fares in Tasmania and Queensland.

The biggest drivers of cost pressures across all household groups were increases in the price of alcohol and tobacco as taxes on these goods rose in line with inflation; recreation and culture amid a surge in domestic holiday travel during the school holidays; and insurance and financial services as premiums and mortgage interest charges continued to climb – although at a slowing rate.

In the 12 months to December, the living cost indexes rose between 2.5 per cent for age pensioners and 4 per cent for working households.

Speaking in Canberra on Wednesday, shadow treasurer Angus Taylor said cost pressures for working families had soared 50 per cent more than CPI since May 2022.

Loading

“The cost of living for hard-working families across Australia is up 19.4 per cent since Labor came to power,” he said. “Families who have a mortgage, who are trying to get the kids off to school [at the] beginning of the school year, who are trying to pay those grocery bills, pay for their insurance, they are the ones struggling with a cost of living that has gone up faster than any other group in Australia.”

In mid-2023, inflation for working families hit nearly 10 per cent, largely due to an increase in mortgage interest rates.

While the annual rise in living costs was largest at 4 per cent for employee households, ABS head of price statistics Michelle Marquardt said slowing growth in insurance premiums, mortgage interest charges and food prices over the past year had contributed to the lowest annual rise in more than two years.

Treasurer Jim Chalmers told a Business Council of Australia event on Wednesday evening that the government had presided over the sharpest fall in inflation during a parliamentary term since inflation targeting began.

“We’ve made this substantial and sustained progress on inflation at the same time as we’ve seen the creation of more than 1.1 million new jobs,” he said. “Inflation is down, unemployment is still low, and, unlike most of our peers, we’ve avoided even one negative quarter of growth. We know the job’s not done … but there is progress to be proud of too.”

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter.