Is the cost of living increasing? > Check the facts
Who: “Today we were with a typical Central Coast family… to talk about the cost of living pressures that they face … for the average family in Australia today costs are going up and up and up.” Opposition Leader, Tony Abbott.
The claim: The cost of living in Australia is increasing.
The facts: According to research released by NATSEM an average Australian household is $5,324 better off since 2008. While prices have increased, household income has seen a larger increase.
The finding: Cost of living pressures have eased for an average family under the Labor government.
Discussion of evidence: While it is true that the things we buy go up in price over time, it is also true that incomes also rise over time. Cost of living pressures occur when the price of the things we buy rises faster than our income. NATSEM ‘s cost of living index increased by 1.7 per cent over the last year, but household income increased faster meaning that households were better off by 1.1 per cent.
Some things have increased faster than the average price increase. For example utilities over the past year have increased 14 per cent. But some things have not increased as fast as average prices, while other things have fallen. For example mortgage interest decreased 14.5 per cent and audio visual equipment has decreased by 5.1 per cent.
While people generally feel that the cost of living is getting worse and politicians are happy to perpetuate this feeling, the fact is that the cost of living is growing more slowly than household income.