Low-income households, older households and households with mortgages are facing the highest cost-of-living pressures in Australia, according to new analysis. Source: ABC News.
Consumer prices as measured by the Australian Bureau of Statistics (ABS) have risen by 7.3 per cent over the past 12 months, which is the fastest rate of inflation since 1990, and officials fear inflation will hit 8 per cent by the end of the year.
But the bureau’s consumer price index (CPI) is a blanket measure, and not all households are facing the same cost-of-living pressures.
That means the impact of inflation is not being felt equally.
For example, as the Reserve Bank of Australia rapidly lifts interest rates, households with mortgages are facing much higher cost-of-living pressures, on average, than renter households and households that own their homes outright.
Associate Professor Ben Phillips, from the Australian National University, has broken households down into different groups to see how cost-of-living pressures are affecting each one.
He says, according to the main ABS measure, consumer price inflation is running at an annual pace of 7.3 per cent and the wage price index is running at 2.3 per cent.
One of the big differences between the CPI and other cost-of-living measures is that the CPI excludes mortgage interest costs.
Households with mortgages are facing much larger increases in their living costs than the other two groups, thanks to the Reserve Bank’s interest rate hikes.
But over the past five years, households who own their homes outright have faced higher cost-of-living increases than the other two groups on average.
When you divide the population into different age cohorts, it shows older cohorts typically face higher cost-of-living pressures than younger cohorts. That finding holds for the past 12 months, and for the average of the last five years, whichever way you cut it.
When you consider the cost-of-living pressures facing different cohorts depending on their main source of income, you get another result. Over the longer term, cost-of-living pressures are greatest for households that need government assistance of some kind.
Inflation’s cost-of-living pinch hits mortgage borrowers, low-income and older households (By Gareth Hutchens, ABC News)