Australians' standard of living improves

http://www.theguardian.com/business/2015/mar/24/australians-standard-of-living-improves

Version 0 of 1.

Australians’ standard of living improved in the past year as a rise in the cost of living was outpaced by average income growth, new analysis shows.

The cost of a typical basket of goods increased by 1.4% throughout 2014, compared with income growth of 2.7%, according to the report by the National Centre for Social and Economic Modelling (Natsem) and analytics provider SAS.

The standard of living index – which measures income increases minus cost of living increases – showed an improvement of 1.2% in the household budget report released on Tuesday.

This rate was moderately below the long-term annual trend of 1.8%, the report said.

But Natsem researcher Ben Phillips described it as “a healthy standard of living recovery” after two years of zero growth between June 2012 and June 2014.

He said growth in the cost of living remained negligible through the second half of 2014 thanks to lower petrol prices and energy prices (the latter influenced by the carbon price removal).

Phillips pointed to alcohol, tobacco, food and health as showing the main increases in the household cost of living in 2014, while transport and utilities and audio visual equipment were offsetting factors.

But standard of living results varied depending on states, with the Northern Territory experiencing the biggest gain (4% improvement) in the past year and the Australian Capital Territory registering the worst outcome (a 2.3% decrease).

The report also showed the richest fifth of Australians had enjoyed a larger increase in living standards than the poorest fifth, underlining concerns about rising inequality.

“The report reflects on Australia’s standard of living through the past 26 years where we find that Australian households are around 59% better off today than they were in 1988, after accounting for their cost of living, representing a financial gain of just over $30,000 per year on average,” Phillips said.

“Western Australia and Northern Territory households have gained nearly double that of most other states with gains exceeding $50,000 per year.”

Greater detail about the findings has been posted on an interactive website.