Finance Consumer Cars, TVs cheaper, but real living costs have soared

Cars, TVs cheaper, but real living costs have soared

cost of living cheaper
Cars and TVs are cheaper than two decades ago. But other costs have soared. Photo: Getty
Twitter Facebook Reddit Pinterest Email

Cars, TVs and computer games are all cheaper than they were 20 years ago, but the cost of things Australians actually need have spiked to double and triple in the same time.

The cost of medical treatment and secondary school education is about triple what it was in the year 2000, while child care and housing are almost double.

Unfortunately for Australians, wages have only gone up 78 per cent in those two decades.

Anthony Doyle from Fidelity International analysed Australian Bureau of Statistics data to show the true cost of living in Australia is higher than the official consumer price index figure.

From 2000 to 2019, Mr Doyle found the cost of secondary education had increased 203 per cent, medical and hospital services went up 195 per cent, and housing was up 94 per cent.

Insurance was up 118 per cent, preschool and primary education went up 159 per cent, and food and alcohol rose 62 per cent.

“The inflation in these categories is far greater than both the wage growth over the same period [of] 78 per cent and the official CPI [of] 57 per cent,” he said on Thursday.

But cars are 14 per cent cheaper and audio visual equipment is 89 per cent cheaper than in 2000.

Clothing, footwear and furniture are all down 10 per cent, and games and hobbies are down 16 per cent.

The Reserve Bank cut interest rates to a record low of 1 per cent this month, to try to drive employment and wage growth.

Mr Doyle said the data shows Australians who invest in the stock market or bonds may need to take on more risk.

“It may not be enough for some Australian households to protect their standard of living from rising costs to own assets that generate returns in line or slightly above the official CPI,” he said.

“Additionally, cash no longer generates a positive real return [which accounts for inflation], and yields on Australian government bonds are at all-time lows.

“As a consequence, the average Australian investor will have to accept more risk within their investment portfolios in the hope of generating higher returns.”