Inflation reached 7.8 per cent in December. But figures from the Australian Bureau of Statistics show inflation has hit employee households the hardest,rising by 9.3 per cent – the largest increase of any household type,and the biggest increase for employee households since the ABS began tracking this data in 1999.
Higher food prices have driven the cost of living up for all households.Dallas Kilponen
Prime Minister Anthony Albanese said the government knows households are under real cost of living pressure.
“Inflation is a global challenge,” he said on Wednesday. “It is something the whole world is grappling with and it is something that the government is very conscious of,and we will be conscious of in the lead-up to the budget.”
ABS head of price statistics Michelle Marquardt said that employee households were feeling more pressure due to increases in mortgage interest rates.
“Mortgage interest charges for employee households rose 26.6 per cent over the quarter,and 61.3 per cent over the year,with banks passing on the Reserve Bank of Australia’s cash rate rises to interest rates for both variable and new fixed rate home loans,” she said.
The Reserve Bank lifted official interest rates at eight consecutive board meetings last year,taking it from a record low 0.1 per cent in May to 3.1 per cent just before Christmas. With inflation at a 32-year high,the board is by a quarter percentage point to 3.35 per cent.
During the hearing on Wednesday,the Reserve Bank’s head of economic analysis Dr Marion Kohler said people have different spending patterns,so cost of living pressures can affect households in varied ways.
“We understand that some people are finding the rise in interest rates difficult to manage and others will have to cut back on discretionary spending,” she told the inquiry.
“However,high interest rates are necessary to ensure that the current period of high inflation and cost of living pressures does not persist.”
Self-funded retirees experienced the second-largest growth in living costs,which rose 7.6 per cent over the last year. That is also the highest rate of growth since 2000.
Those households were most affected by increases in recreation and culture costs,driven by high prices for holiday travel and accommodation.
Marquardt said increased food prices affected all households,with food prices rising between 9 and 10 per cent over 2022,and higher energy prices also hit all budgets.
Charity groups said people’s incomes were not keeping up with those essential expenses.
Speaking at the senate inquiry,Foodbank chief executive Brianna Casey said half a million households will struggle to put dinner on the table tonight.
“A job – or even multiple jobs – is not a shield against the cost of living crisis,” she said.
Jennifer Kirkaldy,general manager of policy and advocacy for the Salvation Army,said the rising cost of living was the main reason people were coming to the charity for emergency relief.
“About one in every three people identified it as the reason they need help,” she said.
“We are also beginning to see a shift in who is seeking help with more people who are employed coming to us and more people seeking food rather than vouchers.”
In the hearing,groups including the Salvation Army,Uniting Care and the Australian Council of Social Services said the rate of government support payments like JobKeeper needs to be increased to help people afford essentials,and the charity sector needs additional support to cope with the ongoing increase in demand.
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