New data from the Australian Bureau of Statistics reveals that annual living costs rose for all household types by between 2.3 and 4.2 per cent last year, with those on government payments facing the steepest increases. The Living Cost Indexes show households relying on government support experienced at least a 4 per cent rise, driven largely by higher energy costs.
In contrast, employee households saw the smallest increase at 2.3 per cent, benefiting from falling mortgage interest charges after the Reserve Bank of Australia cut rates in February, March and August last year. Australian National University researcher Ben Phillips described the situation as "a pretty good story for the majority of households, particularly those with a mortgage."
However, Dr Phillips noted that pensioners and welfare recipients faced a different reality, with electricity costs rising sharply as rebates were phased out. The quarterly rise in living costs slowed in the December quarter compared to September, with lower electricity and health costs offsetting other increases, according to ABS head of prices statistics Michelle Marquardt.
The federal government has announced its electricity bill subsidy will not extend into 2026. Meanwhile, the Reserve Bank raised interest rates by 0.25 percentage points yesterday, pushing the cash rate to 3.85 per cent. Dr Phillips warned that if inflation remains elevated, further rate rises could increase living costs for employee households.
