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Low inflation but high housing costs

Media release

Low inflation but high housing costs

“Rising housing costs are a big worry for households, despite the fall in the CPI in the three months to December”, says Bill Rosenberg, CTU Economist.

“The 0.2% fall in the CPI in the three months to December is not unusual because of seasonally falling food prices. This time it is being helped by falling petrol prices, but was held back by rising housing costs and seasonal food prices not falling as fast as usual,” he says.

“CPI inflation for the year would have been -0.1% instead of 0.8% if it weren’t for rising housing and energy costs. And that doesn’t include rises in interest rates during the year, nor the rising prices faced by first home buyers of existing homes. At almost a quarter (24%) of the expenses of an average household, housing costs are unavoidable and a big drain on incomes. It is an even greater burden for many low income and young families,” said Rosenberg.

“Current low consumer price rises are not a reason for low wage increases”, Rosenberg says. “People are due a catch-up in a growing economy where real wages have not grown as fast as the economy can afford. That is particularly true for low and middle income earners who have had lower increases in incomes and face higher inflation. Lower prices for petrol, diesel, vehicles, computers and other items also reduce costs for firms, making a pay rise more affordable,” said Rosenberg.

ENDS


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