What is the Consumer Price Index?

The Consumer Price Index (CPI) tracks the changes in consumer services’ over time. The CPI is a good indicator of how living costs are rising or falling. When the CPI rises, the cost of everyday items increases, making it more expensive for households to maintain their expected standard of living.

The Reserve Bank of Australia (RBA) uses the headline inflation rate from the CPI when making interest rate decisions.

Major Output items as per ABS are :-

  • Food
  • Alcoholic beverages and tobacco
  • Clothing and footwear
  • Furnishing and household equipment
  • Health
  • Transport
  • Recreation and culture
  • Hotels, cafés, restaurants (includes Uber Eats, takeawaysetc)
  • Miscellaneous goods and services (excluding Insurance and
    other Financial services)

However, lenders also incorporate expenses items such as Childcare, Education costs (Government and
Private including fees, books, excursions, uniforms etc).

In summary, lenders usually have a common sense approach to calculate your spending.

 

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