Australians would have been left shaking their heads in disbelief when the latest inflation figures were released, particularly if they had just filled up their gas guzzler at the petrol bowser.
But, of course, the consumer price index calculation every three months does take in the cost of a broad range of good and services, not just petrol.
And price pressures can impact on households in different ways. The Australian Bureau of Statistics (ABS) does try and dissect the impact from the rise in inflation in its selected living cost indexes, which are released a week after the CPI.
It asks the basic question – by how much would after-tax incomes need to change to allow households to buy the same quantity of consumer goods and services, compared to three months and a year ago?
It calculates employee households – those earning a salary as a main source of income – would have enjoyed a huge benefit from the federal government’s childcare subsidy reforms, which began on July 2.
These would have come under the umbrella of the CPI’s ‘furnishings, household equipment and services’ category, which dropped 1.7 per cent in the September quarter.
Key offsets to this was a rise in tobacco excise in the quarter, as was an increase in ‘recreation and culture’, the latter rising 1.5 per cent, driven by international holiday travel and accommodation due to the peak summer months in Europe and the US.
All up the ABS reckons living costs for employee households rose 0.4 per cent in the September quarter, the same as CPI.
However, inflation for these households rose 2 per cent over the year compared with the official rate of 1.9 per cent.
The story is not so good for aged pensioners, who would not have benefitted from childcare reductions, but would have enjoyed a 1.6 per cent drop in health products due to changes under the Pharmaceutical Benefits Scheme.
Living costs for our seniors would have risen faster than the CPI at 0.6 per cent over the quarter and 2.3 per cent annually.
Self-funded retiree households would have been even worse off because they are seen as spending more on overseas travel.
This would have lifted their overall costs by 0.9 per cent in the quarter, the ABS figures released on Wednesday show.
At least the overall tame nature of inflation suggests borrowing costs shouldn’t be going up any time soon, even if Reserve Bank governor Philip Lowe believes the Australian economy is “performing well”.
Following Tuesday’s central bank board meeting, Dr Lowe said the CPI results were in line with the RBA’s expectations and he sees the rate inflation creeping up to 2.25 per cent in 2019 and a bit higher the following year.
The RBA has an inflation target band of 2 to 3 per cent. Dr Lowe expects further falls in the rate of unemployment to below 5 per cent in coming years and the improvement in the economy should see a lift in wages growth over time.
“Although this is still expected to be a gradual process,” he said in his post-meeting statement.
And there lies the rub. While the economy may be “performing well”, wages growth remains at or about the rate of inflation, suppressing people’s spending power. Little wonder motorists aren’t happy.
While the average national petrol price did ease slightly last week to 156 cents per litre, led by a drop to 148 cents in Sydney, other cities are still paying close to their highest in a decade.
Melbourne drivers are paying close to 160 cents and Canberra 165 cents, according to the Australian Institute of Petroleum’s weekly price report.
That puts a big dent in the household budget and little wonder retail spending has slowed in the past few months.
Colin Brinsden is a former economics correspondent for the Australian Associated Press, based in Canberra.