Cost of Living Comparison

How is the cost of living measured?

Cost of living can be calculated in a number of ways but the main option used in Australia is the Consumer Price Index (CPI). “The simplest way of thinking about the CPI is to imagine a basket of goods and services comprising items bought by Australian households,” explains the Australian Bureau of Statistics (ABS). “Now imagine the basket is purchased each quarter. As prices change from one quarter to the next, so too will the total price of the basket. The CPI is simply a measure of the changes in the price of this basket as the prices of items in it change.”

The basket is divided into the following 11 major groups:

• Food and non-alcoholic beverages
• Alcohol and tobacco
• Clothing and footwear
• Housing
• Furnishings, household equipment and services
• Health
• Transport
• Communication
• Recreation and culture
• Education
• Insurance and financial services

The CPI then shows whether the cost of products has increased or decreased over the quarter and/or year and by how much. This is something we all know as inflation. So, if the CPI increased by 6% over 12 months that means the annual inflation rate is 6%.

It’s also worth noting that your personal inflation rate could be higher or lower than official numbers. It could be the types of items you buy or it could be because of your stage in life. The ABS offered this example: Younger households may incur a higher proportion of their expenditure on housing and child care while those households entering the older age groups may incur increasing expenditure on medical services.

Canstar’s Cost of Living Comparison

For the purposes of Canstar’s Cost of Living Comparison, we have focused on a range of everyday bills including a mortgage, credit card, car loan, health insurance, home insurance, car insurance, pet insurance, life insurance, income protection insurance, gas, electricity, NBN, mobile plan, streaming subscriptions and groceries. Canstar found the average price for a range of products that meet the needs of our hypothetical family of four and then we looked for savings. In some cases, that was simply a matter of switching to the cheapest product and in others, we incorporated our value-based star rating system and used the average price of 5-star rated products. You can see the assumptions that were made in the table and in the fine print underneath it.

Why is the cost of living so high in Australia?

There are a number of reasons the cost of living is high in Australia – COVID-19, the war in Ukraine and natural disasters all contributed to rising costs over the past few years. Fuel prices have been high for a prolonged period although they have started falling. Heavy rainfall and flooding disrupted the supply of fruit and veg and we are still seeing the effects on prices. Electricity prices have continued to rise and so have insurance premiums. We are also paying more for meals out and takeaway food due to ongoing supply and labour shortages. Low vacancy rates across the country have also resulted in higher rental prices. 

What is Australia’s current inflation rate?

• Annual inflation over the twelve months to the December 2023 quarter was 4.1%.
• Quarterly inflation for the December 2023 quarter was 0.6%.