Health and transport drive up costs

The price increases that had the biggest effect in the quarter were transport, driven by a 6.9 per cent increase in fuel; and health, where medical and hospital costs were 3.1 per cent higher.

Transport has been a significant driver of price increases in the past year, mainly due to higher petrol prices, but this has flown under the radar because of electricity and house price rises.

Transport costs had the biggest effect on the Constrained and Affluent tribes, with Cash-Strapped tribes spending a smaller proportion of their income in this area.

Health costs significantly influenced retirement affordability with private health insurance increases the main culprit. Constrained Couples were most affected because they spend the largest proportion of their income on health.

Surprisingly, clothing and footwear also pushed up the cost of living. While the impact was only small, it was unusual because clothing and footwear have been going down in price. In fact, prices are almost identical to what they were in 1990.

Three categories pushed the cost of living down for retirees: recreation, communications, and food and non-alcoholic beverages.

The quarter also saw a small drop in the price of utilities, driven by discounting in electricity and gas, but the decreases were minor when compared with recent increases.

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Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

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Written by Matt Grudnoff

Senior economist at the Australia Institute, Matt is a regular contributor to YourLifeChoices and has extensive knowledge on retirement incomes, taxation and tax concessions, the federal Budget, poverty and inequality, free trade agreements, housing affordability, energy economics and climate change. He worked at the Australian Bureau of Statistics and the Department of Climate Change. Matt is the brains behind Australia's most accurate cost-of-retirement table, the YourLifeChoices Retirement Affordability Index™.

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