Inflation hit working households harder than other types of households in the December quarter, official data shows today.
The analytical living cost index for households with employees rose 0.7 per cent in the December quarter, because of rising interest rates, costlier accommodation and holiday travel, according to the Australian Bureau of Statistics.
The ABS indexes, designed to gauge the impact of rising prices, showed pensioners paying 0.6 per cent more in the quarter, the same percentage increase as people on government assistance, and self-funded retirees.
"It’s not a huge disparity, but it could be enough to see a fence-sitting central bank refrain from raising interest rates in March," said Moody's Economy.com's Matt Robinson.
"Given Australian households are becoming increasingly sensitive to interest rate adjustments, it might be enough to sway a 50:50 decision in favour of leaving the cash rate on hold next month."
Mr Robinson said increases in mortgage rates typically impact working families more than retirees or pensioners, in turn adding to pressures on household budgets.
Markets are currently pricing in about a one-in-two chance of a 25-basis-point interest rate hike in March, according to Credit Suisse data.
Recent ABS data show consumer price inflation rose 0.5 per cent in the December quarter, falling from 1 per cent in September, while in year-on-year terms, inflation rose to 2.1 per cent from 1.3 per cent.
The data released today also show financial services and insurance sub-index jumped 2.9 per cent for households with employees in the December quarter, ABS data show, while it rose 2.2 per cent for households receiving government benefits, and 1.5 per cent for self-funded retirees. For age pensioners financial services sub-index rose by 1.3 per cent.
Since the ABS began tracking the living costs indexes in the June 1998 quarter, age pensioner households' costs increased 43.9 per cent, followed by households receiving benefits which rose 43.8 per cent.
The self-funded retiree households index has risen 39.9 per cent, while households with employees rose by 41.6 per cent.
czappone@fairfax.com.au
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