CHART: Australians are better off than they think they are

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Forget the see-sawing stock market, the decline in company capital spending, weak consumer confidence and falling commodity prices.

Australians are better off than they used to be, according to the latest analysis of household finances.

The cost of living is barely moving the dial and incomes, while not rising by big margins, are well ahead.

According to the latest NATSEM Household Budget report, the cost of living index in the June quarter increased just 0.1%, to give a full year rise of only 0.5%.

Incomes increased 2.2% over the year and the standard of living rose by 1.7%.

This chart shows the story of incomes outstripping costs:

“While the income growth results for households might be disappointing, the containment of price pressures, as measured by cost of living, is helping maintain a continuation of growth in living standards,” says NATSEM, the economic and social policy research group at the University of Canberra.

“The healthy result for the 2014-15 financial year is a welcome improvement relative to the previous two years where living standards were largely unchanged.”

In the June quarter, most states had a flat result for cost of living. Costs fell 0.4% in the Northern Territory and Tasmania 0.2%. NSW had the highest gain at 0.5%.

The NATSEM cost of living index measures the change in prices paid for a typical basket of goods. Standard of living is the financial well being of households as measured by the change in after tax income after cost of living changes.

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