Cost of living prices: Increases & decreases of food, alcohol, housing & more

On April 1, 2016, health insurance premiums increased by an average of 5.59%. But how does that compare to other cost increases in your life?

Each year on April 1st the cost of health insurance premiums changes. This year the weighted average increase is 5.59% – you can check the fund by fund health insurance increases here – but how does that compare to the rising cost of other items? To work that out we have taken a look at the most recent quarterly CPI figures (2016) released by the Australian Bureau of Statistics (ABS).

Small 0.4% increase in cost of food and non-alcoholic beverages

According to the Australian Bureau of Statistics (ABS), the cost of our food and non-alcoholic beverages has increased only very marginally over the 12 months to January – just 0.4%. This is no doubt a welcome relief for shoppers, as food prices have historically increased at a greater rate than inflation.

There’s no doubt that shoppers are bargain hungry, with Canstar Blue research finding that not only do we love having ALDI in Australia, we would potentially like another discount competitor to enter the fray.  Overall, 85% of the 3,000 adults surveyed by Canstar Blue agreed with the statement: “I believe the presence of ALDI is good for Australian consumers.”

6% increase in alcohol and tobacco prices

While food and non-alcoholic beverages maintained a low price increase, the price of alcohol and tobacco has increased 6% in the last year. While many may be quick to complain, it can greatly depend on what you’re drinking. According to a Roy Morgan survey, Aussies are steering away from beer and leaning towards wine as their tipple of choice. Beer is still up there as second choice, followed by cider and ready to drink beverages respectively.

In this case, expensive tastes can also leave to expensive taxes, as the government’s alcohol taxes reveal that a bottle of wine retailing at $50 has more than three times the tax per standard drink then one retailing at $15. Cider and ready to drink beverages also carry the highest amount of tax, over $1 per standard drink. Beer has on average the lowest amount of tax of all alcoholic beverages, so perhaps future trend reports will reveal a different drink of choice.

0.5% increase in cost of clothing and footwear

Over the past year, the consumer price index of clothing and footwear rose only by 0.5%. The reason for this low increase could in part be due to the large increase of fast-fashion retailers around Australia.

International retailers such as Uniqlo, H&M and Zara have all made significant expansions around Australia over the last year by opening up multiple new locations in major cities. Offering on-trend clothing at low prices, the expansion of these brands is providing Australians the luxury of being fashionable on a budget.

2.2% price rise in housing

Housing prices achieved a 2.2% rise, which is markedly smaller then it has been in years past, being the smallest over the last three years.

The main contributor to this increase is from owner-occupiers buying houses, as well as an increase in renting. The ABS housing CPI figure encompasses the cost of renting, new homes (excluding land) and major improvement to existing homes and fixed appliances such as ducted heating, hot water systems and ovens, maintenance and repair, property rates and charges, and utilities such as electricity and gas.

Small 1.9% price increase in furnishings, household equipment and services

Over the last year, the furnishings, household equipment and services group grew by 1.9%, which is a markedly small increase, although it can be almost entirely attributed to the industry of childcare.

Yes – childcare. Because while this expenditure category includes furniture, furnishings and household appliances, it also includes domestic and household services such as full-time and part-time care of children by either community, private or family based day care, as well as hairdressing and personal grooming services, facial beauty treatments, manicures, pedicures, saunas; tattoo and piercing services.

Decrease of 1.4% in transport prices

While many may complain about the efficiency and price of Australian transport, there has actually been a 1.4% decrease in the cost, making it a second year of decline. This would most likely be due to the record low oil prices.

This comes as good news to Australians, as a previous survey by Canstar Blue found that Australians are very conscious of fuel prices, with 60% filling up on days when petrol is cheapest. Considering fuel prices are at a record low – now is the time to fill up, and take advantage of the cheaper cost of running their cars. Consider 57% of Aussies find driving comparatively cheaper than public transport, now is the time to enjoy being behind the wheel.

6.3% price decrease in communications & phone providers

Communication prices fell by 6.3% this year, largely due to your mobile phone and communications provider. Considering the boom of content streaming with services like Netflix, Stan and Presto, providers have been clamouring to offer you the best bargain.

This is likely the first time since social media’s rise in popularity that big name providers felt the need to compete in order to gain the favour of consumers over their competitors. But considering the decrease in price, Australians can rest easy and enjoy their weekend television binges without guilt.

It will be interesting to see whether, in the next ABS quarterly update, whether this year’s rise in stamp prices makes much impact on overall communication costs.

1.6%  increase in prices for recreation and culture

Over the last year, the cost price of recreation and culture increased by just 1.6%, mainly due to domestic holidays and travel.

Travelling domestically is a solution for quick and exciting weekend getaways. While many Australians prefer to travel overseas, almost everyone has a preference when it comes to a short but sweet interstate holiday.

5.5% increase of education costs

The price of education has increased by 5.5%, the main contributor of which being the rise of the cost of tertiary education.

Over the past 10 years, there has been a 28% increase in the number of domestic students enrolled in university every year, according to the Department of Education and Training’s report. While Australia’s tertiary education costs are comparatively lower than some oversea destinations, it is expected that student debt will more than double to $63 billion by 2019, indicating an increase in costs.

Back to health insurance, and keep in mind that this year’s 5.59% increase was the weighted average across all funds. You can check the price change of your individual fund here, and compare health insurance policies here.

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