Some Households Cost-of-Living still rising faster than the CPI

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The little known and used Australian Bureau of Statistics (ABS) quarterly Living Cost Indexes (LCI) for the March 2024 quarter show that, although annual LCIs and the Consumer Price Index (CPI) are falling, for 3 of the 5 household types the annual cost of living increased by more than the better known and much used CPI.

The annual increase in the CPI was 3.6% and the annual increase in the Living Cost Index for each of the 5 household types were:

Household TypesAnnual LCI Increase
Pensioner and beneficiary3.9
Employee6.5
Age pensioner3.3
Other government transfer recipient4.4
Self-funded retiree3.4
A table showing five different household types (pensioner and beneficiary, employee, age pensioner, other government transfer recipient, self-funded retiree) and their respective annual Living Cost Index increases (3.9%, 6.5%, 3.3%, 4.4%, 3.4%).

The greatest annual increase in living costs (6.5%) was for employee households.

A significant difference between the Living Cost Indexes and the Consumer Price Indexes is that the LCI includes mortgage interest charges rather than the cost of building new dwellings. Employee households were most impacted by rising mortgage interest charges, which are a larger part of their spending than for other household types, hence their LCI increase of 6.5% (1.1% higher than the next largest increase, other government transfer recipients).

This The Conversation article by Peter Martin contains background information about the CPI, including why it now excludes mortgage and other interest payments and why it may not be a good indicator of the cost of living for many types of households.