When the bureau first compiled its inflation basked in 1948, spending on dairy goods accounted for 8.1 per cent of household expenditure. By 2019, it had fallen to just 0.96 per cent but it has now climbed back to 1.1 per cent.
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The share of the inflation basket taken up by milk, although small overall, has climbed by more than a quarter since 2019 with prices up 34 per cent.
As a share of our spending and overall consumption, bread has been falling for decades. But since the pandemic, it has climbed and is now back to where it was in 2005.
While Australians used COVID to sharpen their bread-making skills, the end of lockdowns coupled with stimulus handouts and government programs unleashed 19 per cent jump in the share of our spending on restaurant and takeaway meals.
Tea and coffee’s share of the weekly shopping basket has also climbed, up almost a quarter, as people working from home make their own caffeinated beverages.
The bureau’s CPI director, Leigh Merrington, explained that the weights used to measure inflation were important in ensuring that changing consumption and price patterns accurately reflected what was occurring across the economy.
The share of bread spending in the bureau of statistics’ measure of inflation has risen back to where it was in 2005.
He said one example was the change in prices around tobacco, which have climbed, largely because of government policy, by about 10 per cent over the past year.
But consumption of tobacco had fallen over the same period as people give up cigarettes.
If the change in consumption was not taken into account, the surge in tobacco prices would disproportionately increase the rate of inflation.
Price changes also forced people to adjust their spending patterns. A lift in the price of one good may lead shoppers to buy more of a similar product.
A devastating cyclone that wiped out most of Australia’s banana crop contributed to soaring inflation in 2006.Credit: Robert Rough
After Cyclone Larry devastated the nation’s banana crop in 2006, prices for the fruit soared, helping lift the overall measure of inflation. But bananas were so rare that consumers spent more on other fruits such as apples and berries.
Merrington said spending patterns had changed through the COVID pandemic period
“Households are still happy to eat out, but also there are other foods that they’ve been more likely to have at home,” he said.
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It’s not just in the shopping trolley where patterns have changed. COVID restrictions, and the increase in working from home, has changed purchases around vehicles and public transport.
The share of the inflation basket given over to motor vehicles has increased by 27 per cent from the pre-COVID period. But the share taken up by public transport has plummeted by almost 53 per cent.
As we worked from home, many people bought a pet to keep them company.
That has now become embedded in the inflation basket with pets alone accounting for more households’ spending than on beef and sausages. While the pet share of spending has climbed by 23 per cent since COVID, the share spent on veterinary bills is up by more than a third.
Hairdressing, heavily affected by COVID restrictions, has roared back with its share of inflation up by almost 30 per cent.
While the inflation basket has picked big increases, there have also been substantial falls. The share of utilities, such as electricity and water, of childcare and of major household items have all dropped since COVID.
Spending on international holidays surged after the COVID-era ban on overseas travel ended. But the pandemic’s impact lingers, with its share of the inflation basket down by almost 11 per cent while there’s been a near-12 per cent increase in domestic holidays.
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