All household types in Australia experienced higher living costs in the March quarter, with quarterly increases ranging from 0.6% to 1.6%, according to new data from the Australian Bureau of Statistics (ABS).
The main contributors to the rise in living expenses were health, housing, and food and non-alcoholic beverages.
“Rises in pharmaceutical products, medical and hospital services, electricity and fruit and vegetables have contributed to higher living costs for all household types this quarter,” said Neel Tikaram, ABS acting head of prices statistics.
The findings come as financial stress in Australia hits a 10-year high, with only one in three working Australians now feeling financially secure, according to AMP’s 10th Financial Wellness report.
ABS reported that households primarily reliant on government payments experienced the largest rise in living costs this quarter. These groups—age pensioner, other government transfer recipients, and pensioner and beneficiary households—faced higher health costs than employee and self-funded retiree households.
The rise in health expenses followed the annual reset of Medicare and PBS safety net thresholds on Jan. 1, which reduced the number of households qualifying for subsidies.
“Out-of-pocket electricity costs rose as most households in Brisbane had used up the $1,000 Queensland State Government electricity rebate,” Tikaram said.
“Some households in the remaining states and territories also saw higher electricity bills this quarter due to the timing of the 2024–25 Commonwealth Energy Bill Relief Fund rebate payments.”
Seasonal shortages contributed to higher produce prices, with avocados, mangoes, asparagus, tomatoes, and lettuce seeing notable increases due to reduced supply.
Living costs for employee households rose 1.1% for the quarter. These households are more exposed to mortgage interest charges and education expenses compared to other household types.
Mortgage interest charges rose 1.5%, slightly down from 1.7% in the December 2024 quarter. Meanwhile, Education costs rose 5.3%, driven by annual fee increases across primary, secondary, and tertiary levels.
“The rise in mortgage interest charges was driven by higher mortgage debt levels and the continued rollover of expired fixed rate mortgages to higher variable rate mortgages,” Tikaram said. “The effect of the Reserve Bank of Australia’s cash rate cut in February 2025 will be seen in the June 2025 quarter due to the timing of the change in the cash rate.”
Self-funded retiree households experienced the smallest rise in living costs, up just 0.6%. This group benefited from falling holiday travel and accommodation prices, which represent a larger portion of their spending compared to other households.
“Higher mortgage interest charges, insurance premiums, and food prices over the year contributed to rises in annual living costs across all household types,” Tikaram said.
Other government transfer recipient households had the largest annual rise at 3.5%, with rent and tobacco—which make up a larger portion of their spending—contributing to the increase.
Employee households followed with a 3.4% annual rise. Although this represents a moderation from previous highs, the cost of servicing mortgages remains a key pressure point.
“Annual growth of 3.4% in employee living costs has continued to slow this quarter and is down from the peak of 9.6% in the June 2023 quarter,” Tikaram said. “The most significant contributor to rises in employee households’ living costs was mortgage interest charges.”
Mortgage interest charges increased 8.8% in the year to March, down from 14.7% in the 12 months to December.
