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Living costs for Age pensioner and Pensioner and beneficiary (PBLCI) households fell 0.1 per cent in the December 2024 quarter according to the latest data from the Australian Bureau of Statistics (ABS). This is the first fall in quarterly living costs since the June 2020 quarter for households whose main source of income is government payments.

Michelle Marquardt, ABS head of prices statistics, said: “Lower prices for electricity due to the 2024-25 Commonwealth Energy Bill Relief fund rebates impacted living costs this quarter. These lower electricity prices largely offset rises in other areas of living costs.”

Living costs were also impacted by an increase in Commonwealth Rent Assistance (CRA) this quarter, especially for Age pensioner and Pensioner and beneficiary households. The increase in CRA reduced the amount of rent payable by eligible households. From 20 September 2024, the maximum rate for CRA increased by 10% in addition to the usual biannual CPI indexation each year.

Government payment recipient households also experienced falls in Health costs due to an increase in the proportion of these households reaching the Pharmaceutical Benefits Scheme (PBS) safety net threshold this quarter, reducing their out-of-pocket expenses.

Employee households saw the largest rise in living costs across the household types this quarter, up 0.4 per cent.

“While the growth in Employee households’ living costs has also slowed this quarter, these households continued to see higher rises than others as they are more impacted by mortgage interest charges. The Reserve Bank of Australia’s cash rate stayed the same this quarter, however higher mortgage debt levels and the continued rollover of expired fixed rate mortgages to higher variable rate mortgages led to a rise in mortgage interest charges” Ms Marquardt said.

“Falls in electricity and automotive fuel, as well as slowing growth in insurance premiums, mortgage interest charges and food prices over the last 12 months, contributed to the lowest annual living cost rises in over two years,” Ms Marquardt said.

Of the household types, Employee households had the largest annual rise in living costs, up by 4.0 per cent.

“Mortgage interest charges were up 14.7 per cent over the year, down from an annual rise of 18.9 per cent in the September 2024 quarter. The smaller annual increase reflects the unchanged cash rate over the last 12 months, and a fall in the share of expired fixed rate mortgages rolling over to higher variable rate mortgages,” Ms Marquardt said.

Age pensioner and Self-funded retiree households saw the smallest annual rises in living costs, both up 2.5 per cent. Mortgage interest charges and Rents, which rose over the year, make up a smaller proportion of spending for these household types.

The Pensioner and Beneficiary Living Cost Index (PBLCI), which measures living costs for age pensioner and other government transfer recipient households, rose 2.8 per cent over the year, compared to a rise of 2.4 per cent in the Consumer Price Index (CPI).

Government pensions are indexed on 20 March (and 20 September) by the greater of the rise in the PBLCI and CPI over a six-month period.

Over the six months between the June 2024 quarter and December 2024 quarter, the PBLCI rose 0.2 per cent while the CPI rose 0.4 per cent.