Struggling with health costs

The Consumer Price Index (CPI) rose 0.4 per cent in the March quarter, compared with a rise of 0.6 per cent in the December 2017 quarter.

The increase for the 12 months to 31 March 2018 was 1.9 per cent, identical to the previous 12 months.

The most significant price rises were gas and other household fuels (+6.0 per cent), pharmaceutical products (+5.6 per cent), vegetables (+3.7 per cent) and medical and hospital services (+1.5 per cent).

The Australia Institute senior economist Matt Grudnoff said Constrained Couples were most affected by the health-care increases.

“This is primarily because Constrained Couples spend the largest proportion of their income on health. Conversely, Cash-Strapped Couples spend the smallest proportion of their income on health.”

The most significant offsetting price falls were in recreation with international holiday travel and accommodation down 2.4 per cent and household furnishings, with audio, visual, and computing media and services down 6.1 per cent and furniture down 2.8 per cent.

These falls mainly benefitted Affluent Couples and Singles who spend the most in these areas.

In previous quarters, the largest cost of living increases have usually had the biggest effect on Cash-Strapped Couples and Singles, said Mr Grudnoff. This quarter it was, unusually, Constrained Couples who bore the brunt of the rises because of the increases in the cost of health.

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