While the average for all goods and services rose 6.1 per cent in the past 12 months, spending on essential goods and services rose 7.6 per cent. This affects those on lower incomes more, as they use a larger proportion of their incomes to buy the essentials in life.
In the March quarter, cash-strapped singles experienced the biggest increase in the cost of retirement (2.2 per cent for the quarter and 7.3 per cent for the year), followed by cash-strapped couples (2.1 per cent for the quarter and 6.9 per cent for the year).
Constrained singles (1.9 per cent and 6.4 per cent) and constrained couples (1.8 per cent and 6.3 per cent) experienced smaller but still significant increases.
Well-off couples (1.9 per cent and 6.2 per cent) and well-off singles (1.9 per cent and 6.1 per cent) experienced the smallest increases.
More challenges – and opportunities – ahead
An optimistic Treasurer Jim Chalmers told Parliament that Australia was outperforming much of the world, but admitted that didn’t make it easier to pay the bills at home.
“Our high inflation is primarily but not exclusively global,” he said. “It will subside but not overnight.
“We have it within us to stare down these threats, steer our way through this difficult period, and seize the opportunities of this new age.”
In the June quarter, inflation continued to grow rapidly.
Mr Grudnoff said inflation drivers were largely the same as in previous quarters: bottlenecks brought on by the world emerging from pandemic lockdowns, the war in Ukraine combined with the sanctions imposed on Russia, heavy rain and flooding in key agricultural areas and the COVID zero policy being pursued in China.
The culprits behind rising cost of retirement
The main drivers in the June quarter were transport, housing and food.
There was some good news with Mr Grudnoff pointing to moderating petrol prices and shipping rates that had fallen back towards pre-pandemic levels. These are yet to flow through to the official statistics, he said.
Transport continued to be the main driver, increasing by 2.3 per cent for the quarter and 13.1 per cent for the year. Automotive fuels (i.e., petrol, diesel etc) increased by 4.2 per cent for the quarter and 32.1 per cent for the year. This includes the full effect of the drop in the fuel excise after the March federal budget.
The price of new cars rose 1.2 per cent for the quarter and 5.5 per cent for the year because of continued supply constraints increasing the cost of making and supplying new cars.
Huge jump in housing costs
Housing increased 2.5 per cent for the quarter and 9 per cent for the year, driven mainly by new dwellings purchased by owner-occupiers (i.e. the price of building a new house excluding the price of the land). The cost of new dwellings purchased by owner-occupiers rose 5.6 per cent for the quarter and 20.3 per cent over the past 12 months. Rents rose 0.7 per cent for the quarter, the largest quarterly increase since 2014.
Food and non-alcoholic beverages increased 2 per cent for the quarter and 5.9 per cent for the year, driven by fruit and vegetable price rises (+5.8 per cent) after heavy rainfall and flooding in key production areas in NSW and Queensland and rising fertiliser costs.
June quarter Retirement Affordability Index™
| Weekly expenditure for retirees aged 54-plus | Well-off couples | Constrained couples | Cash-strapped couples | Well-off singles | Constrained singles | Cash-strapped singles |
| Expenditure items | Couple homeowners with private income | Couple homeowners on Age Pension | Couple who rent on Age Pension | Single homeowners with private income | Single homeowners on Age Pension | Single who rent on Age Pension |
| Housing | 204.95 | 121.13 | 229.41 | 137.71 | 101.64 | 180.73 |
| As a percentage of expenditure | 13% | 13% | 29% | 15% | 20% | 37% |
| Domestic fuel & power | 43.42 | 32.61 | 34.42 | 31.40 | 28.11 | 23.86 |
| As a percentage of expenditure | 3% | 4% | 4% | 3% | 6% | 5% |
| Food & non-alcoholic beverages | 265.58 | 187.06 | 169.14 | 133.43 | 93.78 | 84.05 |
| As a percentage of expenditure | 17% | 20% | 22% | 15% | 18% | 17% |
| Alcoholic beverages & tobacco products | 58.36 | 31.91 | 51.87 | 31.52 | 18.77 | 26.39 |
| As a percentage of expenditure | 4% | 3% | 7% | 3% | 4% | 5% |
| Clothing and footwear | 31.43 | 17.84 | 9.43 | 20.91 | 9.07 | 7.48 |
| As a percentage of expenditure | 2% | 2% | 1% | 2% | 2% | 2% |
| Household furnishings & equipment | 82.48 | 35.79 | 21.77 | 45.14 | 20.96 | 16.72 |
| As a percentage of expenditure | 5% | 4% | 3% | 5% | 4% | 3% |
| Household services & operation | 46.78 | 33.10 | 17.88 | 42.21 | 23.85 | 12.67 |
| As a percentage of expenditure | 3% | 4% | 2% | 5% | 5% | 3% |
| Medical & health care | 159.89 | 113.96 | 39.46 | 91.81 | 40.66 | 24.06 |
| As a percentage of expenditure | 10% | 12% | 5% | 10% | 8% | 5% |
| Transport | 227.24 | 147.51 | 70.14 | 120.37 | 61.39 | 41.40 |
| As a percentage of expenditure | 14% | 16% | 9% | 13% | 12% | 8% |
| Communication | 34.12 | 24.18 | 26.16 | 33.02 | 17.05 | 13.30 |
| As a percentage of expenditure | 2% | 3% | 3% | 4% | 3% | 3% |
| Recreation | 314.63 | 106.84 | 69.47 | 146.54 | 55.12 | 33.27 |
| As a percentage of expenditure | 20% | 12% | 9% | 16% | 11% | 7% |
| Education | 0.64 | 0.23 | 0.00 | 0.14 | 0.13 | 0.01 |
| As a percentage of expenditure | 0% | 0% | 0% | 0% | 0% | 0% |
| Personal care | 31.31 | 19.00 | 13.20 | 19.50 | 10.29 | 9.12 |
| As a percentage of expenditure | 2% | 2% | 2% | 2% | 2% | 2% |
| Miscellaneous goods & services | 94.28 | 50.84 | 25.43 | 57.23 | 27.85 | 17.35 |
| As a percentage of expenditure | 6% | 6% | 3% | 6% | 5% | 4% |
| Total weekly expenditure | $1595.12 | $922.01 | $777.80 | $910.92 | $508.66 | $490.41 |
| Total monthly expenditure | $6912.19 | $3995.38 | $3370.47 | $3947.32 | $2204.20 | $2125.11 |
| Total annual expenditure | $82,946.28 | $47,944.56 | $40,445.65 | $47,367.89 | $26,450.34 | $25,501.36 |
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