It’s one of the most common laments of the Australian householder: ‘Everything has got so expensive’, or ‘I can’t believe the cost of (insert item here) these days’.
Opposition politicians, too, will constantly remind us about the cost of living and how it becomes increasingly harder to make ends meet. Remember the resonance among voters to Kevin Rudd’s 2007 election platforms of FuelWatch and Grocery Choice?
Well, the Commonwealth Bank’s broking arm, CommSec, may beg to differ. CommSec has compiled a list tracking the prices of 87 consumer goods and services over the past 10 years.
Perhaps surprisingly, almost 30 per cent of them have come down in price since 2009.
Twenty six of the 87 items fell in price, with consumer goods such as televisions and computers dropping more than 70 per cent in the past decade.
Made with Visme Infographic Maker
CommSec chief economist Craig James said the 26 items that had fallen in price reflected a global trend witnessed in similar economies, such as the United States, Canada, New Zealand and the United Kingdom.
“It is partly globalisation, and more competition globally, so when you look to buy an item of clothing, for example, you can go to David Jones or Myer, or you go on the internet where you could be buying it from here or from somewhere else around the globe,” Mr James said.
“It is a factor of us becoming more efficient at producing these items. We’ve seen huge leaps in machines, processes and production of clothing, for example, and to a certain extent, cars.”
But everyday produce items were also on the list, such as bread, milk, eggs and cereals, driven largely by more intense supermarket competition, he said.
The list arguably erodes somewhat the repeated complaint about stagnating wages at a time of sharp increases in the cost of living, he said.
“Wages are only important in terms of what they can buy,” Mr James said. “And wages are growing at about 2.5 per cent a year [to December], while inflation is at 1.3 per cent [to March]. So by anyone’s reckoning, the cost of living is actually getting more affordable.”
However, CommSec also tweeted a list of 16 items that had far outpaced wages, with common household costs such as electricity (101 per cent), medical and hospital (79 per cent) and gas (76 per cent) topping the list.
Cost of living perspectives:
Of 87 expenditure class items in the Consumer Price Index, 16 have seen prices rise faster than wages over the past decade#ausbiz #ausecon #markets #auspol @RBAInfo pic.twitter.com/faAcY9llDt
— CommSec (@CommSec) April 30, 2019
What is also missing from the list is property.
Australian Bureau of Statistics figures show that the median price of an “established house” in Sydney in June 2008 was $490,000.
By June 2018, that same dwelling came in at $982,000.
The same figures for a dwelling in Melbourne were $400,000 and $750,000 respectively.
Land prices are absent from CPI considerations, of course. Average 11% pa increase in total Australian land values since 1996 (Table 61 ABS 5204.0) That, & accordingly escalating size of mortgage debt is arguably what's crippled aggregate demand and (therefore) the Oz economy.
— Bryan Kavanagh (@bryankav123) April 30, 2019