Australian households under pressure as cost of car travel rises at triple the rate of inflation
Australian households are under increasing budget pressure when it comes to car travel as transport costs balloon to three times the inflation rate.
The typical household’s transport costs rose by about 13% in 2023, outpacing the inflation rate of 4.1%.
Drivers in capital cities faced increases of 12.4% while the average driver in regional areas was hit with a 13.7% rise.
High upfront costs for buying new vehicles, higher car loan interest rates and increasing insurance premiums were behind the ballooning transport costs, according to the Australian Automobile Association’s Transport Affordability Index.
Sabrina Mo works as a building designer in Sydney’s inner west and travels around New South Wales for work, including the occasional trip interstate.
She is feeling the cost increases.
Car registration and insurance costs increased by more than $300 in 2023 compared with the previous year while her toll payments almost doubled.
“Everything is just too expensive,” Mo said.
With the uncertain nature of the work taking her to wherever the projects are, she has to keep her transport budget open.
“Sometimes I might have to be out of the office for a whole week and sometimes I’ll be in the office for two or three weeks,” she said. “I have to drive wherever the demand is.”
In 2022 she was paying $1.20 a litre for petrol at the bowser but since 2023 it has been at least $1.60.
So she has had to make changes elsewhere.
“For other things like my groceries [budget] ... I can manipulate it because I can be creative and start cooking really cheaply.”
Transport costs rose by a smaller 0.7% in the final quarter of 2023 but that did not offset large increases throughout the year, leading to transport affordability declining substantially.
In December 2022, the average city household spent 15.6% of its income on transport but that rose to 17% a year later.
The transport expenditure for households in the region rose from 14.4% of its income to 15.8%.
The decline in transport affordability is becoming a heavy burden on Australians feeling the cost-of-living pressures as the peak motoring body’s managing director Michael Bradley called on governments to consider these pressures when formulating policy.
“Transport is a significant and unavoidable expense for households and is also one of the key drivers of general inflation,” Bradley said.
In the December quarter, Canberra was the most affordable capital with the average household spending 14.8% of income on transport.
Hobart was the least affordable where 19.3% of an average household’s income went to transport.