Self-funded retirees have endured a jump in the cost of living twice the rate of the Consumer Price Index (CPI) increase in the September quarter.
Australian Bureau of Statistics (ABS) data shows that the CPI rise for the quarter was 0.4 per cent across the board, but for self-funded retirees it soared to 0.9 per cent.
The increase from last year’s September quarter to this year’s also hit age pensioners hard.
Year on year inflation was 1.9 per cent, but retired Australians were hit with an annual cost of living rises of 2.3 per cent.
Other types of pensioners and welfare recipients had their costs increase 2.2 per cent over the 12 months.
Employed Australians, however, only felt a rise of two per cent in their living costs.
The Living Cost Indices (LCI) are calculated as a weighted average of eight capital cities for the cost of a “basket” of goods and services. The basket includes food and beverages, tobacco, clothing and footwear, housing, household equipment and services, health, transport, communication, recreation and culture, education, insurance and financial services.
“The LCI for age pensioner households rose 0.6 per cent in the 2018 September quarter, with the main contributor being housing (+1.1 per cent), driven by property rates and charges,” the ABS said.
“Recreation and culture (+1.5 per cent) also contributed to the rise, driven by international holiday travel and accommodation, due to the peak summer seasons in Europe and America.”
The most significant offset for age pensioners was a 1.6 per cent fall in health costs.
“This was driven by pharmaceutical products, due to the cyclical effect of a greater proportion of consumers who qualify for subsidies under the Pharmaceutical Benefits Scheme, reducing their out-of-pocket expenses.”
The universal CPI figure was lower (0.4 per cent) in the quarter because of a reduction in child care costs which age pensioner households do not have to fund.
The LCI for self-funded retiree households rose at twice that rate (0.9 per cent), largely because of an increase in recreational costs of 2.2 per cent for that group in the September quarter.
The offset from lower health expenditure was less pronounced for self-funded retirees, coming in at just -0.5 per cent.
The LCI for this group recorded a bigger rise (0.9 per cent) compared to the CPI because their households spend more on recreation and culture, the ABS said.
There is a detailed explanation of how indices that track price fluctuations are created on the ABS website.