A decade of falling prices for household items is helping savers

Household wealth has been helped by falling prices for many items, but the cost of living still bites. | SEE THE LIST

A cost-of-living crunch is being felt by many households, but Australians are getting more bang for their buck across thousands of products and services compared with a decade ago.

Detailed Australian Bureau of Statistics consumer price inflation data shows while overall costs have climbed almost 20 per cent since mid-2011, prices of several key products have plunged more than 12 per cent.

Computing equipment had the biggest price falls, down 56 per cent, followed by telecommunication costs falling 25 per cent, but others on the list may surprise people more.

Fruit is now 15 per cent cheaper than it was a decade ago, while breakfast cereals, bank fees and even ice cream also cost less today.

For many, these small wins are overshadowed by bigger price increases in necessities such as health, education and utilities, economists and budgeting specialists say.

MyBudget founder Tammy Barton said price falls in technology and other consumer goods had been “helpful and no doubt provided some relief to households”.

Households had been saving more money during the pandemic, Ms Barton said, but it many cases that was offset by increasing spending in other areas online.

She said consumers should be patient and shop around.

“It is definitely worth holding off on big-ticket purchases until there is a sale,” she said.

“Ask for discounts for paying with cash on items like TVs and whitegoods, and where possible try to avoid buy now, pay later schemes.”

KPMG chief economist Brendan Rynne said falling prices were all about global supply chains and competition among manufacturers, retailers and other businesses.

“We are now getting bananas from around the world, and we are not just dependent on bananas from north Queensland,” he said.

Countries with cheaper labour costs – such as China – were forcing down manufacturing costs of many products and this flowed through to consumers, Dr Rynne said.

And IT products were still following Moore’s Law, where computing power doubled while technology costs halved every two years, he said.

MyBudget founder Tammy Barton says shop around for cheaper household appliances.

Both small and large household appliances cost less today than they did a decade ago, despite soaring demand during the pandemic.

AMP Capital chief economist Shane Oliver said lower prices for discretionary goods would continue if vaccines worked long-term and people went back to spending more money on holidays and entertainment.

“It’s the necessities of life that have been going up the most,” he said.

The ABS data shows electricity, gas, council rates, insurance, education and health costs have all jumped at least 40 per cent – double overall inflation – in the past decade.

Dr Rynne said households had been handling these rises because wages growth had been outstripping consumer price growth.

“The cost of living is up and we focus on things we pay for – we’re less cognisant of our own salary increases,” he said.

KPMG forecasts low inflation over the long term, driven by a declining oil price.

“Part of that decline is because there is a shift in the intensity of energy use from carbon-based energy, such as oil, to renewable energy,” Dr Rynne said.

Originally published as A decade of falling prices for household items is helping savers