prices these days! the cost of living in australia amp-natsem report 31 ben phillips june 20, 2012
TRANSCRIPT
Prices These Days!The Cost of Living In Australia
AMP-NATSEM Report 31Ben Phillips June 20, 2012
2
Introduction● Report analyses cost of living pressures in Australia
● Are households better/worse off than previous decades?● Which groups in Australia are at most pressure?● Is it prices or expectations/wants that drive the
pressures?● What are we spending our money on these days?● Which capital cities are most expensive?● International comparisons
3
The Macro picture on prices and income in Australia
4
The macro picture on prices in Australia
5
National Accounts – Real Income/Expenditure (per-household)
6
ABS Surveys – Real Disposable incomeReal Disposable Income, ABS, NATSEM $pw
$700
$800
$900
$1,000
$1,100
$1,200
$1,300
$1,400
$1,500
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: ABS Survey of Income and Housing, NATSEM calculations
7
What’s gone up? What’s gone down in price?
8
Luxuries versus Necessities
● Discretionary items
● Necessities
● Relative necessity
● Have necessities increased more in price than other items? Do we devote more expenditure to necessities?
9
Examples
10
Discretionary and Necessary SpendingDiscretionary vs Necessary Expenditure by Income Level,
Households 2009-10 %
33.536.3
39.6 40.5
44.6
19.420.8 21.5
23.0 22.3
47.0
42.9
38.936.6
33.1
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Q1 (Low) Q2 Q3 Q4 Q5 (High)
Discretionary Relative Necessity Necessary
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Figure 6 - Household Income Quintile Basic Necessity Purchase %
30
32
34
36
38
40
42
44
46
48
50
1984 1988 1993 1998 2003 2009
Q1 (Lowest) Q2Q3 Q4Q5 (Highest) All
12
Figure 5 - Household Income Quintiles Discretionary Purchase %
30
32
34
36
38
40
42
44
46
48
50
1984 1988 1993 1998 2003 2009
Q1 (lowest) Q2 Q3
Q4 Q5 (Highest) All
13
Figure 7 - Household Income Quintile Relative Necessity Purchase %
15
17
19
21
23
25
27
29
1984 1988 1993 1998 2003 2009
Q1 (Lowest) Q2 Q3
Q4 Q5 (Highest) All
14
Figure 9 - Housheold Main Source of Income Basic Necessities %
30
32
34
36
38
40
42
44
46
48
50
1984 1988 1993 1998 2003 2009
W&S BusinessGovernment Benefits Other
15
Figure 10 - Working Families, Necessities vs Discretionary Expenditure %
25
27
29
31
33
35
37
39
41
43
45
1984 1988 1993 1998 2003 2009
Necessities Discretionary
16
Living Cost Indexes
● CPI vs LCI vs cost of living index
● How is an LCI calculated
● Data sources
● Standard of living
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Living Cost IndexABS Living Cost Index and CPI, Index = 100 Jun-98
80.0
90.0
100.0
110.0
120.0
130.0
140.0
150.0
160.0
Jun-
98
Dec-9
8
Jun-
99
Dec-9
9
Jun-
00
Dec-0
0
Jun-
01
Dec-0
1
Jun-
02
Dec-0
2
Jun-
03
Dec-0
3
Jun-
04
Dec-0
4
Jun-
05
Dec-0
5
Jun-
06
Dec-0
6
Jun-
07
Dec-0
7
Jun-
08
Dec-0
8
Jun-
09
Dec-0
9
Jun-
10
Dec-1
0
Jun-
11
Dec-1
1
Employee Age pensioner
Self-funded retiree CPI (re–referenced)
18
Living Costs Index
19
Standard of living gains
20
Income gains beyond the cost of living
21
What are we spending all the extra money on?
22
23
Expenditure, Volume and Price Change
24
25
Capital City Cost of Living Comparison
26
International Cost of Living Comparison
27
GDP per capita
28
Conclusions● Many households are doing it tough – but on
average this situation is not getting worse in fact most are doing better.
● Cost of living pressures have more to do with pressures of modern living and aspirations than Prices these days!
● Given that prices are in control government policy is better focussed on staple areas (eg Health or education, the economy) rather than simplistic cost of living pressures.
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THANKYOU FOR YOUR TIME TODAY
Ben Phillips
Principal Research Fellow
NATSEM – University of Canberra
June 2012