Working families are still under acute financial pressure but fewer cash rate hikes of late has tempered growth in their overall living costs.
In the 12 months to the December quarter, living costs rose 6.9 per cent for employee households, down from the 9.6 per cent peak in the June 2023 quarter.
Employee households are still enduring the largest annual increases in living costs of the household types charted by the Australian Bureau of Statistics.
Other groups tracked in the selected living cost indexes include age pensioners, self-funded retirees, and other recipients of government supports.
Yet moderating mortgage interest charges – which make up a large portion of the employee group’s spending as the most likely to be servicing a home loan – have helped ease the annual pace of growth.
In its selected living cost indexes, the bureau has mortgage interest charges rising 40.3 per cent annually through to December, well down from a peak of 91.6 per cent in the 12 months to the June quarter of 2023.
ABS head of prices statistics Michelle Marquardt said the slowdown in the central bank’s interest rate tightening cycle was helping to slow the pace of growth.
“While the Reserve Bank of Australia has implemented fewer cash rate increases in recent months, previous interest rate increases and the rollover of some expired fixed-rate to higher-rate variable mortgages continued to contribute to rises,” Ms Marquardt said.
Self-funded retiree households, the most likely to own their own homes and be insulated from rising borrowing costs and rents, have been experiencing smaller increases.
Their living costs still rose four per cent over the 12 months, reflecting still strong price increases for things like insurance and food.
The release of the latest selected living cost indexes, similar to the consumer price index but includes changes in property prices and interest rates, followed the RBA’s decision to keep the cash rate on hold at its February board meeting.
The no-change call was widely expected given annual inflation came in below expectations at the last print.
Poppy Johnston
(Australian Associated Press)
