Households struggle as cost of living outstrips wage growth in two decades

Electricity, gas and water costs are draining Melbourne families, with prices more than tripling, and utility bills racing ahead of wages growth in the past two two decades.

Electricity, gas and water costs are draining Melbourne families, with prices more than tripling in two decades.

Combined utilities bills have raced ahead of wages growth, climbing a whopping 208 per cent since 1996.

Fresh fruit, vegetable and lamb ­prices have also more than doubled in that time, Australian National University analysis for the Sunday Herald Sun reveals.

And drivers are shelling out hundreds of dollars more a year for petrol, which is now almost twice the price.

HOW MUCH FOR ‘REASONABLE’ STANDARD OF LIVING

STATE’S BIGGEST SPENDERS REVEALED

FRUIT AND VEG SURGE 9 PER CENT DUE TO DROUGHT

Consumers feeling the pinch are searching for cheaper alternatives, such as swapping steak for cheaper cuts and buying budget grocery brands.

The review of Melbourne inflation data for key household expenses found food and non-alcoholic drink prices had jumped 81 per cent.

Transport overall, which includes the cost to buy, service and repair cars, tolls, public transport fares and fuel, is up 50 per cent.

Utilities prices have more than tripled since 1996.

But consumers have benefited from an 11 per cent drop in communications costs, in large part because of better-value mobile phone plans with cheaper calls and bigger data allowances.

ANU associate Professor Ben Phillips tracked June quarter consumer price index changes from 1996 to 2018.

Prof Phillips said households paid most attention to price rises for essentials, particularly as wages growth had slowed over time.

“Between 2000 to 2008, prior to the global financial crisis, wages growth was well above the cost of living,” he said.

“Since that point we have been treading water.”

In Victoria, average full-time earnings are $83,725 a year, up from $37,050 in 1996.

Prof Phillips said lower-income households were hurting most from utilities bills, which started “taking off” about a decade ago.

While new cars were relatively cheaper today because they had ­improved features, the cost to keep ­vehicles on the road had risen.

Monash University research associate David McCloskey said shoppers feeling the pinch reacted by buying cheaper groceries such as home brands.

Some substituted more expensive items such as red meat for cheaper ­alternatives, while others delayed paying for or did not get health insurance, or ­reduced spending on entertainment and travel.

Imica Aurora, husband Andrew and children Marek, 4, and Jake, 7, try to save on groceries. Picture: Mark Stewart

“Welfare agencies are seeing more and more calls for assistance,” he said.

St Vincent de Paul Society policy and research manager Gavin Dufty said Victoria’s desalination plant costs had contributed to water prices.

The electricity smart meter rollout, environmental schemes, higher international gas prices and Hazelwood’s power plant closure were among factors behind energy price spikes.

Fresh food prices were affected by drought, flood and fire; extra demand due to population growth; and the exp­ort market for Australian products.

Berwick resident Imica Aurora looks for specials when shopping and said the difference between home and non-home brand products could sometimes be unnoticeable.

“I have my favourite brands when it comes to certain foods, especially meats and other speciality items, but when it comes to other groceries and cleaning products, you can definitely find a home-brand alternative,” she said.

Cost Of Groceries 1996-2018

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@KarenCollierHS