After last week’s inflation figures the government got some good news from today’s Cost of Living figures.
Wed 5 Nov 2025 13.00
Photo: AAP Image/Lukas Coch
Inflation figures are done by trying to work out the average spending by all Australian households; the cost of living figures however split up the households into groups. They do this because obviously a household with people working are going to have different spending habits that retirees, or those on government benefits.
Also importantly the cost of living measures count the cost of repaying a mortgage, whereas the CPI figures do not. And because this year there have been interest rates cut, that has meant the cost of living for those with a mortgage has gone up by less than overall inflation. The impact is biggest for “Employee Households” because they are the ones most likely to be paying off a mortgage, whereas those who are on the age pension or other government benefits are much less likely to have a home loan.
While inflation in the year to September grew 3.2%, the cost of living for employee households rose just 2.6%.
The news was not so good for those who neither have a mortgage or who spend more of their income on necessities. As we noted last week, the big driver of inflation was electricity prices, rents, and other necessities. As a result, those who do not get the benefit of the falling interest rates saw their cost of living rise by more than inflation.
Solar power is producing more electricity than needed in the middle of the day when the sun is strongest. In turn that has reduced prices to zero in the middle of the day.
The Greens, with the support of the Coalition, have established a Senate inquiry into the capital gains tax (CGT) discount. The CGT discount is an enormous tax concession that goes to people who buy investment properties.
Yesterday the Reserve Bank of Australia announced no change in official interest rates. Among other reasons it said “measures of labour underutilisation remain at low rates, job vacancies are still at a high level and business surveys and liaison continue to suggest that a significant share of firms are experiencing difficulty sourcing labour.”
The Shadow Treasurer, who you would think would have an easy day given the RBA decided not to cut interest rates, unfortunately keeps finding a rake to step on.
