The Price is Right? An Examination of the Cost of Living in Western Australia

The Western Australian economy has experienced something of a roller-coaster ride over the last decade. Unprecedented economic growth over the course of the resources boom has been followed by a post-boom period during which activity has cooled. Despite a reduction in demand in a number of industry sectors, there is a prevailing notion that West Australians remain exposed to high cost of living pressures. Yet several worldwide cost of living indicators suggest that Perth has actually become increasingly affordable relative to other cities. So how can we reconcile these differences? This tenth report in BCEC’s Focus on Western Australia series examines the important issue of cost of living in WA, and how real household living costs have changed in recent years. It begins by tracking the prices of broad categories of goods and services in Perth over time, relative to other capital cities. This is followed by a detailed analysis of the expenditure pattern of WA households across the State’s regions. We also examine the extent to which wages have lagged behind price growth for different population subgroups in WA. The report sheds light on policy issues that affect the economic wellbeing of West Australians, including the impact of cost of living pressures on income inequality and poverty. This report looks at various indicators of cost of living, and highlights the limits in using CPI and inflation rate measures to draw inferences about the real living cost pressures faced by households or individuals in vulnerable circumstances. The Price is Right? seeks to understand how much households are spending on goods and services to maintain a baseline standard of living. A detailed analysis of expenditure patterns and incomes of WA households, drawn from the latest Census and Household Expenditure Survey data, reveals what types of households are hardest hit and which WA regions are doing it tough.