Eumundi Voice Issue 115, 17 April 2025

ECONOMY

Where does the money go?

Cost of living pressures are felt by all of us, but how has household expenditure changed over the decades?

Prices for food, groceries and rent have been recorded in Australia since 1901. Today the Australian Bureau of Statistics (ABS) collects data that provides an estimation of price changes and the associated impact on living costs, known as the Consumer Price Index (CPI). It helps provide a measure of inflation in Australia.

Compared to 60 years ago, households now spend relatively less on food, clothing and furnishings and more on housing, holidays, health and education. Those changes were not driven solely by price but also by new products coming to market, changes in production methods and costs, taxation rates, product availability and social desirability.

An average household in 1960 spent 17% of its income on clothing and footwear and 32% on food, compared to 3.2% and 17.7% respectively in 2023. Spending on alcohol and tobacco shifted only from 8% to 7.7%. Over the same period, housing costs increased from 14.9% to 22.4%, health costs from 0.8% to 6.2%, communication costs from 0.8% to 2.2% and recreation and culture from 3.2% to 11.8%.

Expenses for education and insurance and financial services were not collected in 1960 but by 2023 accounted for 4.4% and 5.6% of household expenditure.

The ABS found that some food and grocery items are relatively more expensive now than they were 50 years ago while others are cheaper and still others are about the same. The largest increase in relative price since 1973 was for bread, with a basic loaf of white bread bought in a supermarket costing $4.40 in 2023 compared to $0.20 in 1973 (or $2.30 in today’s money) for a similar–sized loaf delivered to home. Other items that are relatively more expensive today include laundry detergent, tea and potatoes. On the other hand, bacon, eggs, flour, rice, butter and milk are all cheaper today than the average prices paid in 1973 adjusted for overall inflation.