Rising costs wipe out Age Pension increase

Pensioners may have received a boost to their payments in September, but the latest inflation figures show most of that increase has been wiped out already.

The Australian Bureau of Statistics (ABS) released its quarterly Consumer Price Index (CPI) figures on Wednesday, revealing a 0.8 per cent increase for the September quarter, largely driven by rising petrol costs.

The annual CPI inflation was 3.0 per cent in the September quarter and the trimmed mean inflation figure (which measures underlying inflation by reducing the impact of temporary price fluctuations) rose from 1.6 per cent to 2.1 per cent, which was the highest it had been for more than five years.

Read: Age Pension increases: 20 September 2021

Petrol costs were the biggest and most significant price rises for the quarter (rising 7.1 per cent), which many retirees will have noticed, with prices around $1.80 a litre in metropolitan Melbourne.

Fuel prices have risen 36 per cent from the lows that were seen in the middle of last year.

The maximum average daily unleaded petrol price for Australia reached a record high of $1.65 per litre during the September 2021 quarter.

There were also significant price rises for the cost of new dwellings (an increase of 3.3 per cent) in the September quarter.

Read: Age Pension increase to be ‘wiped out’ by rising grocery costs

While the pandemic is becoming less of a concern as vaccination rates pick up, the virus is still wreaking havoc on supply chains, with surging shipping costs and local labour shortages forcing prices up in some areas.

ABS head of price statistics Michelle Marquardt said this situation was partly to blame for some of the September CPI increase.

“Construction input costs such as timber increased due to supply disruptions and shortages,” said Ms Marquardt. “Combined with high levels of building activity, this saw price increases passed through to consumers.

Read: Does the government’s lazy economy option put future pension increases at risk?

“Rising fuel prices also contributed to the September quarter CPI increase, with the CPI’s automotive fuel series reaching the highest level in its half-century history.”

Global supply disruptions resulted in price rises for some items including furniture (+3.8 per cent), motor vehicles (+1.4 per cent) and audio-visual equipment (+1.8 per cent).

The most significant price falls were fruit (-8.3 per cent) due to favourable growing conditions for berries, avocados and citrus fruits, and reduced demand from the food service industry, reflecting lockdowns in Sydney and Melbourne.

Clothing prices also fell (-5.5 per cent) as retailers looked to move excess winter stock.

Darwin, (+1.5 per cent), Brisbane (+1.3) and Canberra (+1.3) were the capital cities that registered the biggest CPI increases for the September quarter, while Hobart was the least affected rising just 0.3 per cent for the quarter.

Hobart’s figures were considerably lower than the rest of Australia due to falling electricity costs after the annual price review and the introduction of a $125 winter energy bill supplement for concession customers.

In the past 12 months, Darwin is the capital city that has suffered most, recording an annual CPI increase of 5.9 per cent, while Adelaide is the capital city that has suffered least with an annual CPI increase of just 2.5 per cent.

Have you noticed the sky-high petrol prices in your area? Have the petrol prices forced you to rethink how often you use your car? Why not share your thoughts in the comments section below?

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Written by Ben