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Cost of living remains high: Inflation up 6.9%

A composite image of Australian currency and people lined up at a grocery story to demonstrate the rising cost of living.
The rising cost of living has caused Aussies to cut back. (Source: Getty)

The monthly Consumer Price Index (CPI) rose 6.9 per cent in the year to October and, while the cost of living remains stubbornly high, it has dropped from a 7.3 per cent rise in September.

Australian Bureau of Statistics (ABS) head of prices statistics Nichelle Marquardt said this month’s annual movement of 6.9 per cent did represent a drop but “inflation remains high”.

In October, the most significant contributors to the annual rise were new dwellings (up 20.4 per cent), automotive fuel (up 11.8 per cent) and fruit and vegetables (up 9.4 per cent).

Automotive fuel prices increased 11.8 per cent in the year to October, up from 10.1 per cent in September.

Food and non-alcoholic beverage prices eased from an annual rise of 9.6 per cent in September to 8.9 per cent in October.

The ABS said improved growing conditions saw increased supply of fruit and vegetables, leading to lower prices in October compared to September.

In the 12 months to October, prices for fruit and vegetables rose by 9.4 per cent, down from September’s reading of 17.4 per cent.

Holiday travel and accommodation prices fell from an annual rise of 12.6 per cent in September to 3.7 per cent in October. Airfare prices eased as school holidays came to an end and with lower demand for travel to Europe and America during the off-peak tourist season.

Aussies cutting back

This comes as new data revealed more than a third of Australians (37 per cent) were less likely to spend on discretionary items than they were 12 months ago.

The latest Equifax Australian Credit Scorecard survey highlighted just how the evolving economic conditions had taken a toll on consumers.

The data found Aussie consumers were starting to take their finances more seriously, with 51 per cent implementing budgeting techniques and seven out of 10 mortgage holders reporting they had adjusted their spending habits over concerns they wouldn't be able to make their repayments.

Equifax general manager consumer James Forbes said many mortgage holders were struggling with higher repayments.

“Many mortgage holders who bought at the top of the market haven’t had time to pay down

their loans or build equity,” he said.

“Depending on how far they have extended themselves, this group is going to be among the first to feel the pinch as interest rates rise.”

Forbes said, as a result, many mortgage holders were looking for levers they could pull to help alleviate the financial strain.

“Our data shows that refinancing has surged to nearly 38 per cent of all home loans, and we can see a steady increase from April this year as interest rates started to rise and homeowners looked to find a better deal or fix their loan. We expect that trend to continue for some time,” he said.

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