CORONAVIRUS COVID-19 PANDEMICGENERAL PROPERTY

Construction costs drive up inflation

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THE June quarter saw inflation soar by 6.1% on the previous year, with the cost of petrol and building costs the main drivers.

According to the ABS, the Consumer Price Index (CPI) was up 1.8% over the June quarter, with new dwelling purchases by owner-occupiers increased by 5.6%, while experiencing their largest annual increase since the ABS began the series in 1999.

“These are confronting numbers when it comes to the cost of living pressures that Australians in every corner of our country are feeling that inflation is high and rising,” said Treasurer Jim Chalmers.

New dwelling prices have been placed under increasing pressure by maintained high rates of construction activity in tandem with ongoing shortages of both materials and labour.

At the same time, the increase has also come from fewer government construction grant payments compared to the previous quarter, where they went some way to reducing out of pocket expenses.

By state Brisbane recorded the largest increase in new dwelling prices, rising by 7.0%, followed by Melbourne with 6.9% and Adelaide with 6.0%.

More broadly, the housing group of the CPI saw a 2.5% increase over the quarter, also driven rents rising by 0.7%, with Sydney and Melbourne recording increases for the second consecutive quarter, while maintenance and repairs to dwellings was also pushed up by 1.3%.

Petrol also saw another increase for the quarter, rising for the eighth time in a row, attributed largely to the Russian invasion of Ukraine at the same time as increased global demand as a result of lifted COVID-restrictions.

Darwin saw the most significant petrol price rises at 6.2%, followed by Canberra with 5.6% and Adelaide with 4.9%.

Over the quarter, furniture also saw significant price increases, up 7% and 8.5% for the year, driven by factors such as high freight costs, limited supply and strong demand.

Quarterly furniture price increases were led by Sydney at 8.9%, followed by Hobart at 8.6% and Melbourne at 7.1%.

Meanwhile, Childcare saw a 7.3% decrease over the quarter, thanks to the March-introduced increased subsidies for families with two or more children under six.

Sydney saw the greatest fall in the cost of childcare with a 9.4% decline, thanks to the state government’s before and after school care vouchers further reduced out–of–pocket costs for families in Sydney.