What is the cost of living and inflation?
No doubt you’d like to know how far your Australian dollars will stretch and how much money (if any) you’ll have left after paying your bills. For years, Australia was considered a relatively cheap country in which to live but due to the increased cost of housing, energy, transport, health insurance, recreation, clothing and food (to name just a few things) in recent years, it’s no longer considered a low cost country, particularly if you live in Sydney or Melbourne.
Australia has relatively low inflation, which was just 1.25 per cent in September 2009.
The cost of living in Australia has increased considerably for all income levels in the last 20 years, although incomes have increased much faster for the rich than the poor, and in recent years life for most people in ‘middle Australia’ has become much more expensive. Hardest hit are pensioners on a fixed income or receiving superannuation which has been decimated in the last few years. It has been estimated that a couple now needs an income of around $50,000 a year for a comfortable retirement and at least $30,000 for a modest retirement (the state pension for a couple is less than $25,000).
Australia’s consumer price index (CPI), issued by the Australian Bureau of Statistics (www.abs.gov.au), gives an indication of how prices have risen (or fallen) over the past year (the inflation rate). The CPI (which sceptics reckon stands for ‘con people incessantly’) is calculated from a basket of basic goods and services, including computer equipment, financial fees and higher education fees, but not mortgage interest rates.
In the Mercer 2009 Cost of Living survey (www.mercer.com/costofliving), rankings of Australian (and NZ) cities plunged following a dramatic depreciation of the Australian (and NZ) dollar against the US dollar. Sydney remains the most expensive city for expatriates in the region but dropped from 15th to 66th position, while Melbourne was in 92nd position, down from 36th. (Auckland was in 138th – down from 78th – and Wellington in 139th from 93rd). The top five places were occupied by Tokyo, Osaka, Moscow, Geneva and Hong Kong, with New York in 8th place and London in 16th.
Bear in mind that with the huge fluctuations in exchange rates in 2009, the world has been turned upside down and the US and Euro countries have become significantly more expensive, while Australia and New Zealand (and the UK) have become relatively cheaper.
Although most surveys agree that Sydney is Australia’s most expensive city, most don’t agree on the position of other Australian cities. There’s little difference in the cost of living between Adelaide, Brisbane and Perth. The cost of living in rural areas is, not surprisingly, much lower than in the major cities (particularly housing).
Manufactured goods tend to be expensive in Australia, particularly imported goods, including automobiles, clothes and other manufactured items such as ‘white goods’ (e.g. washing machines and fridges), which are generally more expensive than in Europe or North America. Travelling between Australian cities is expensive owing to the long distances involved, although petrol is much cheaper than in Europe.
Your food bill naturally depends on what you eat but the cost of food is broadly similar to the US and around 25 per cent lower than in most European countries. Approximately $400 should be sufficient to feed two adults for a month in most areas (excluding alcohol, caviar and fillet steak). The prices of staple foods in Australia’s capital cities are listed in the monthly British newspaper Australian Outlook and a free Commonwealth Bank Property Value Guide is published annually by the Commonwealth Bank of Australia (www.commbank.co.au), while BankWest publish a Key Worker Housing Affordability Report (www.bankwest.com.au).
Even in the most expensive cities (e.g. Sydney), the cost of living needn’t be astronomical. If you shop wisely, compare prices and services before buying and don’t live too extravagantly, you may be pleasantly surprised at how little you can live on.
Quality of Life
Australian cities rate highly in international quality of life surveys, although (not surprisingly) the ratings vary considerably depending on the criteria used; however, most surveys rate Australian cities highly. In 2009, Sydney was ranked 10th in Mercer's Quality of Living survey (www.mercer.com/qualityofliving) of 215 cities – below Auckland in equal 4th place! – with Melbourne in 18th, Perth in 21st, Adelaide in 30th and Brisbane in 34th position. In the Economist’s World’s Most Liveable Cities index (www.economist.com), Melbourne was placed 3rd, Perth was in joint 5th place, Sydney in equal 9th position, Adelaide was ranked 11th and Brisbane was 16th on the list (out of 140 cities). In yet another survey conducted by Monocle magazine (www.monocle.com), Melbourne was ranked 9th in the world’s top ten most liveable cities.
The BankWest Quality of Life index (www.bankwest.com.au/Media_Centre/BankWest_Research/BankWest_Quality_of_Life_Index_2008/index.aspx) tracks where living standards are highest in Australia, by ranking local performance across key indicators of the labour and housing markets, the environment, education and health.
For more information see Living and Working in Australia by David Hampshire
