Then along came COVID. By 2020,as the country began a nationwide housing frenzy due to record-low interest rates,housing accounted for 24 per cent of the entire inflation basket. Food spending,which lifted during the COVID lockdowns of the period,increased to its highest proportion since the turn of the century to 17.4 per cent.
In its most recent update,the bureau reports food has edged down from its 2020 pandemic hoarding highs but Australians are still putting more of their weekly grocery bills towards such things as beef,chicken,milk,coffee,soft drinks and vegetables.
Eating out,be it in a restaurant or via takeaways,is now at its highest share of our weekly spending since the bureau started officially measuring this sector in the mid-1970s.
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As a proportion of the inflation basket,eating out accounts for 6.81 per cent of total spending. That is an increase of 16 per cent over its pre-pandemic level and a bigger share of our expenditure than petrol (3.6 per cent),domestic holidays (2.4 per cent) and electricity (2.2 per cent).
Our spending patterns changed in other ways. The surge in lockdown pets,and their associated veterinary bills,means the proportion of our spending devoted to furry friends and their health needs is 28 per cent above its pre-pandemic levels.
Expenditure on clothing is 11 per cent up (although the share devoted to shoes is down by 11 per cent),the share of our spending devoted hairdressing and personal care is up by 16 per cent while health spending is 16 per cent higher.
To make way for this extra spending,the proportion we devote to other goods and services has fallen. The biggest drop has been on transport fares,down 53 per cent on 2017 levels while the share devoted to the cleaning,repair or hire of clothes has dropped by 42 per cent.
International travel came to a standstill when the Morrison government closed the borders. Despite surging by 2213 percent from its 2020 level,the share of expenditure devoted to overseas trips is still down 41 per cent on its pre-COVID level.
AMP senior economist Diana Mousina said COVID and its restrictions on our way of life had changed our spending patterns which were now reflected in the inflation basket used by the ABS.
She said spending should return to pre-pandemic patterns,but it was taking longer than expected and could change even more as higher interest rates start to bite.
“We’ve seen the price of goods go up and that’s contributing to the inflation we’re seeing. I think services are going to return as spending on goods falls back as interest rates continue to rise,” she said.
“Retail spending remains at elevated levels,and you can see that in the inflation figures,but over time it is going to come back a bit and we’ll see that in a change in our spending patterns.”
While housing’s share of the inflation basket reached an all-time high in 2020,it has now fallen below its pre-pandemic level.
The bureau does not include house prices in its measure of inflation,but takes in rents,utilities and costs associated with purchase of newly built homes.
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It said that while spending on rents had grown over the past two years,total expenditure across all goods and services had grown by more. Electricity consumption has also dropped which,combined with rebates offered to households by some states to offset surging prices,had pushed down its share of the inflation basket.
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