Costs that drove inflation increase

spike in fuel costs drives cost-of-living increase

The Consumer Price Index (CPI) rose 0.6 per cent in the March quarter, with higher fuel prices, compared to the low prices in 2020, accounting for much of the rise.

The most significant rises were automotive fuel (+8.7 per cent), medical and hospital services (+1.5 per cent) and pharmaceutical products (+5.3 per cent) due to the resetting of the Medicare and Pharmaceutical Benefits Scheme (PBS) safety nets. This had the biggest impact on constrained couples (+0.8 per cent), who spend a bigger proportion of their income on transport and medical care, mainly through private health insurance. Constrained singles and well-off couples and singles (+0.6 per cent) were also affected. Cash-strapped couples (+0.5 per cent) and singles (+0.4 per cent) were least affected as they tend to travel less and cannot afford private medical care. A rise in prices for accessories (+7.3 per cent) reflected high consumer confidence and demand for discretionary items such as jewellery, allowing jewellers to pass through elevated input costs. The CPI rose in all eight capital cities, ranging from 0.3 per cent in Melbourne to 1.4 per cent in Perth and 2.6 per cent in Darwin. BIS Oxford Economics chief economist Dr Sarah Hunter said she expected inflation to accelerate sharply in the June quarter – above 3 per cent – for reasons including childcare costs, a further rise in average fuel prices, lifts in the cost of some insurance products and upward pressure on new dwelling costs as a result of commodity and labour shortages in the sector. “Notwithstanding these one-off factors, core inflation is likely to remain weak for some time,” she said.

Weekly expenditure for retirees aged 54+

Well-off couples Constrained couples

Cashstrapped couples Well-off singles Constrained singles

Cashstrapped singles Expenditure items Couple homeowners with private income Couple homeowners on Age Pension Couple who rent on Age Pension Single homeowner with private income Single homeowner on Age Pension Single who rents on Age Pension Housing $183.60 $108.51 $205.51 $123.36 $91.05 $161.91 as a percentage of expenditure 12% 13% 28% (-1%) 15% 19% 36% Domestic fuel & power $42.02 $31.56 $33.31 $30.39 $27.20 $23.09 as a percentage of expenditure 3% 4% 5% 4% 6% 5% Food & non-alcoholic beverages $249.51 $175.74 $158.90 $125.35 $88.11 $78.96 as a percentage of expenditure 17% 20% (-1%) 22% 15% 19% 17% Alcoholic beverages & tobacco products $57.20 $31.08 $50.51 $30.70 $18.23 $25.58 as a percentage of expenditure 4% 4% 7% 4% 4% 6% Clothing and footwear $30.81 $17.49 $9.25 $20.50 $8.89 $7.33 as a percentage of expenditure 2% 2% 1% 2% 2% 2%

Household furnishings & equipment $75.79 $32.88 $20.01 $41.47 $19.26 $15.36 as a percentage of expenditure 5% 4% 3% 5% 4% 3% Household services & operation $43.55 $30.81 $16.64 $39.29 $22.20 $11.80 as a percentage of expenditure 3% 4% 2% 5% 5% 3% Medical & health care $153.82 $109.64 $37.96 $88.32 $39.11 $23.14 as a percentage of expenditure 10% 13% 5% 10% 8% 5% Transport $195.43 $126.86 $60.32 $103.52 $52.80 $35.61 as a percentage of expenditure 13% 15% (+1%) 8% 12% 11% 8% Communication $34.34 $24.34 $26.34 $33.24 $17.16 $13.39 as a percentage of expenditure 2% 3% 4% 4% 4% 3% Recreation $301.25 $102.30 $66.52 $140.31 $52.78 $31.85 as a percentage of expenditure 20% 12% 9% 17% 11% 7% Education $0.62 $0.22 $0 $0.13 $0.12 $0.01 as a percentage of expenditure 0% 0% 0% 0% 0% 0% Personal care $29.75 $18.06 $12.55 $18.53 $9.78 $8.67 as a percentage of expenditure 2% 2% 2% 2% 2% 2% Miscellaneous goods & services $90.78 $48.96 $24.48 $55.10 $26.82 $16.71 as a percentage of expenditure 6% 6% 3% 6% (-1%) 6% 4% Total weekly expenditure $1,488.47 +$9.48* $858.44 +$6.72* $722.30 +$3.35* $850.22 +$5.30* $473.50 +$2.73* $453.40 +$1.82* Total monthly expenditure $6,450.02 +$41.07* $3,719.90 +$29.10* $3,129.96 +$14.51* $3,684.29 +$22.98* $2,051.81 +$11.81* $1,964.72 +$7.88* Total annual expenditure $77,400.21 +$492.83* $44,638.79 +$349.13* $37,559.56 +$174.10* $44,211.45 +$275.67* $24,621.76 +$141.75* $23,576.70 +$94.68*