While the government is happy that inflation grew just 2.4% we always need to remember than inflation (measured as the Consumer Price Index) is not cost-of-living.

The big reason is that the CPI does not measure mortgage repayments. Good thing is that the ABS does also measure “cost of living” which includes mortgages (and doesn’t include the cost of building a new home, which let’s be honest, ain’t a cost of living).

The ABS also divided households up into types – employees (ie someone working); government beneficiaries (so those on Jobseeker or Disability Support or Single Parenting Payment), Age Pension and “Self-funded (or let’s be honest, tax-break funded) retirees.

The upshot is that in the past year the increase in the cost of living was:

Employees: 4.0%

Age Pensioners: 2.5%

Other govt transfer recipients: 3.2%

“Self-funded” retirees: 2.5%

CPI: 2.4%

The big reason for the difference with inflation is in the past year the cost of mortgage repayments went up 14.7% in 2024 (down from a 18.9% rise in the year to September.) And since March 2022, mortgage repayments have risen… (gulp) 159%.

This is why the government (and anyone with a mortgage) will be glad that the market thinks there is a 95% chance the RBA will cut rates in 2 weeks