The prices of some household essentials have soared almost four times the rate of overall inflation since the Coalition came to power in 2013, despite the efforts of Scott Morrison to drive down key weekly expenses.
As new figures suggest the cost of building a house is going to get even more expensive this year, a breakdown of Australian Bureau of Statistics data shows huge increases in prices for everything from insurance to sending a child to high school.
Cost of living has been front and centre during the election campaign for the prime minister and Labor leader Anthony Albanese, with both claiming their parties were best placed to help Australians cope with higher prices.
“There are things you can do to help people dealing with those cost-of-living pressures. But we also have to be upfront about these pressures being real,” Morrison said on Friday.
Annual inflation climbed by 5.1 per cent through the March quarter, the highest rate since the introduction of the GST, while underlying inflation is at its highest rate since 2009.
Financial markets and most economists believe the Reserve Bank will use its May 3 meeting to lift the official cash rate to 0.25 per cent from 0.1 per cent. That would be the first rate rise since 2010 and the first in an election campaign since 2007.
Since the Coalition was elected in 2013, overall prices have climbed by 17.8 per cent in Sydney and 18.5 per cent in Melbourne, according to an analysis of ABS data by and . Over that period, wages have increased 18.2 per cent in NSW and 19.9 per cent in Victoria.
But the prices of so-called non-discretionary goods – which account for about 60 per cent of all household spending – have pushed higher than the overall inflation rate.
New dwelling purchase costs have soared by 37 per cent in Sydney and 31 per cent in Melbourne. Dwelling costs are the single largest expense for Australians, accounting for almost 9¢ of every dollar they spend.
The cost of secondary education has lifted by 46 per cent in Sydney and 44 per cent in Melbourne over the same period.
Despite the government’s efforts to keep a lid on childcare costs, they are 32.6 per cent higher in Melbourne today than in late 2013, while in Sydney they are up 45.1 per cent.
Medical and hospital costs have risen by 50 per cent in both cities, the price of beef is up 81 per cent in Sydney and 69 per cent in Melbourne, while insurance costs have lifted by 25 per cent and 34 per cent respectively.
While some essentials have spiralled, others have fallen sharply.
The biggest drop has been in prices for telecommunication goods – driven by new iPhones and Android smartphones – which have tumbled 28 per cent during the Coalition’s term.
Electricity costs, which account for 2.5 per cent of household budgets, in Sydney are almost 2 per cent lower now than in 2013 while in Melbourne they are just 2 per cent higher.
Prices for bread in Melbourne have actually fallen over the past nine years, the cost of breakfast cereals has dropped in both cities but vegetable inflation at 26 per cent has climbed faster than overall CPI.
Both the government and Labor were provided with the and analysis but had not responded directly to the figures by deadline.
Speaking in Tasmania earlier on Friday, Morrison said government policy had targeted those parts of the economy it could control such as electricity prices.
“You can’t necessarily change the price of a lettuce. But what you can do is you can halve petrol tax, and that’s exactly what we did,” he told a press conference.
But Albanese said after almost a decade in power, prices were still outpacing incomes for most Australians.
“Every single time there is an issue that they are uncomfortable with, like the rising rate of inflation and the problems of cost of living, Mr Morrison never accepts responsibility. He always blamed someone else,” he said in Sydney before flying to Perth.
Some pressures are likely to continue. The bureau’s measure of business inflation, released on Friday, showed prices up by 1.6 per cent in the March quarter, the largest three-month increase since 2009. Annual business inflation is now at 4.9 per cent.
Input costs for the house construction sector jumped by 15.4 per cent over the year, with timber and joinery up 20.6 per cent alone.
Independent economist Nicki Hutley said people were worried about cost-of-living pressures well before the most recent inflation figures were published.
She said a certain amount of inflation was good, helping to pay down debts and encourage investment, but if it got too strong, people would reduce spending so they could afford essentials including petrol and fresh food.
“If you can only afford to buy one orange instead of three, that’s what you’re going to do. And clearly that means consumer demand – which is a huge part of the economy – falls,” she said.
Broadly, household savings remain high, but Hutley said those savings were not evenly distributed.
“Particularly, low income households don’t have those reserves. So this is going to affect those least able to cope with it the most,” she said.
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( Information from smh.com.au was used in this report. To Read More, click here )