Living costs lower than inflation in December

Posted: 1 February 2017 2:18 pm

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Mortgage interest charges fall for employee households.

The cost of living in Australia for most households increased in line with the consumer price index (CPI) during the December quarter, according to the latest data.

However, in its Selected Living Cost Index (LCI) for December 2016, the Australian Bureau of Statistics (ABS) revealed employee households' costs rose just 0.3% as a result of price increases in alcohol and tobacco (+2.7%), driven by the effects of the federal government's latest tobacco excise tax increase.

Inflation increased by 0.5%, meaning working Australians were financially better off last quarter.

Rising transport costs (1.7%), driven by pricier fuel, were offset by a fall in insurance and financial services (-1.5%). The drop was aided by falling mortgage interest charges following the RBA's August cash rate cut.

Housing and education costs remained flat during the December quarter, while working households spent less on furnishings, household equipment and services (-0.9%) and health (-0.5%).

Over the last twelve months the LCI for employee households rose 1% while CPI rose 1.5%.

The average weekly total cash earnings for Australians was a little over $1,200 in May last year, with managers banking the highest occupational salaries, according to the latest data.

Find out how financial lenders calculate your living costs when assessing your home loan application.

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