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Inflation and the Cost of Living

Author

Listed:
  • David Jacobs

    (Reserve Bank of Australia)

  • Dilhan Perera

    (Reserve Bank of Australia)

  • Thomas Williams

    (Reserve Bank of Australia)

Abstract

This article looks at increases in the cost of living for Australian households over the past decade. Inflation as measured by changes in the consumer price index (CPI) overstates ‘true’ increases in the cost of living due to a number of inherent conceptual differences and measurement issues. Even so, other measures of the cost of living have increased by a similar amount to the CPI over the past decade. Measured inflation has been higher for some households and socio-economic groups than for others, though the differences have generally not been large and have tended to even out over time. Although cost-of-living inflation has been moderate across most households, there are a number of reasons why some households might have perceived inflation to be higher than it actually was.

Suggested Citation

  • David Jacobs & Dilhan Perera & Thomas Williams, 2014. "Inflation and the Cost of Living," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 33-46, March.
    • Handle: RePEc:rba:rbabul:mar2014-04
    as

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    File URL: https://www.rba.gov.au/publications/bulletin/2014/mar/pdf/bu-0314-4.pdf
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    References listed on IDEAS

    as
    1. Garry F. Barrett & Matthew Brzozowski, 2010. "Using Engel Curves to Estimate the Bias in the Australian CPI," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 1-14, March.
    2. Brachinger, Hans Wolfgang, 2008. "A new index of perceived inflation: Assumptions, method, and application to Germany," Journal of Economic Psychology, Elsevier, vol. 29(4), pages 433-457, August.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Fanny Salignac & Julien Hanoteau & Ioana Ramia, 2022. "Financial Resilience: A Way Forward Towards Economic Development in Developing Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 160(1), pages 1-33, February.
    2. Fanny Salignac & Axelle Marjolin & Rebecca Reeve & Kristy Muir, 2019. "Conceptualizing and Measuring Financial Resilience: A Multidimensional Framework," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 145(1), pages 17-38, August.
    3. Maneka Jayasinghe & Eliyathamby A. Selvanathan & Saroja Selvanathan, 2020. "The Financial Resilience and Life Satisfaction Nexus of Indigenous Australians," Economic Papers, The Economic Society of Australia, vol. 39(4), pages 336-352, December.

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