Persistent inflation weighs down retiree costs | Australian Markets

The fee of a snug retirement way of life was provided a small reprieve within the December 2024 quarter after electrical energy costs dived, however it nonetheless managed to drag up with a 1.3 per cent increase over the past 12-month period.

The latest Affiliation of Superannuation Funds of Australia (ASFA) Retirement Customary confirmed that budgets elevated by 0.1 per cent within the December quarter, with {couples} aged round 65 now needing $73,077 per 12 months to dwell comfortably in retirement, and singles needing $51,805; comparable figures have been recorded for these aged round 85, with {couples} needing $67,714 and singles needing $48,971 to attain snug retirement. 

This comes because the 2024-25 Commonwealth Vitality Invoice Reduction Fund (EBRF) rebates have been launched from July 2024, permitting electrical energy costs to drop by 9.9 per cent within the December quarter and 25.2 per cent within the final 12 months. With out the rebate, electrical energy costs would have risen by 0.2 per cent within the December quarter.

Pharmaceutical merchandise additionally recorded a drop[ of 1.6 per cent in costs due to more individuals now eligible to receive subsidies for prescription medicines under the Pharmaceutical Benefits Scheme (PBS) and increased take-up of 60-day prescriptions.

The majority of other costs tracked by ASFA’s retirement standard recorded some increases, but also indicated that the rate of rising costs had slowed:

• Food prices rose 3.0 per cent over the 12 months to the December quarter, down from 3.3 per cent in the September quarter. Price rises eased across most food categories apart from meat and seafoods. Fruit and vegetable prices remained 6.3 per cent higher compared to 12 months ago, despite falling 3.3 per cent this quarter.  
• Domestic holiday travel and accommodation rose by 5.7 due to an increase in travel demand during the school holiday period driving up prices for airfares and accommodation.
• Beer prices were up 1.2 per cent in the quarter, with the price of spirits up 1.1 per cent.
• Insurance costs rose 1.1 per cent – the weakest quarterly rise since the June 2022 quarter – thanks to easing reinsurance and replacement and repair costs contributing to a moderation in insurance premium price growth across house, home contents and motor vehicle insurance.

According to the association, some of the price increases were mitigated by strong investment returns generated last year, after balanced superannuation funds typically returned between 10.5 and 12 per cent in 2024 and retirement-phase accounts returned even more.

“The good news for retirees from the latest Retirement Standard is there has been a substantial easing in price increases for the goods and services they purchase. However, the last couple of years of high inflation are still weighing on their ability to fund a comfortable retirement,” ASFA CEO, Mary Delahunty, said.

“While recent strong investment returns are helping retirees and those planning for retirement in achieving their desired retirement lifestyles, the most recent Retirement Standard budgets reinforce the fact that Australians need both compulsory superannuation and voluntary contributions which are preserved until retirement to have the sort of retirement they need and deserve.”