Pain for families as prices jump

People surviving on a welfare cheque and families trying to pay off a mortgage are facing spiralling prices that are growing 50 per cent faster than the official measure of inflation.

Figures from the Australian Bureau of Statistics show that the official inflation rate is running at 3.3 per cent, but once the typical spending patterns of families, aged pensioners and welfare recipients were taken into account, their cost of living was increasing at a much greater rate.

The special measures from the ABS take into account how families often spend much of their income on mortgages, the greater dependence on fresh fruit and vegetables by age pensioners and how welfare recipients spend more than others on alcohol and cigarettes.

In the 12 months to the end of March, the cost of living for those on welfare jumped 5.1 per cent, and for working families their real inflation rate was 4.9 per cent.

Age pensioners faced an increase in the cost of living of 4.1 per cent.

Working families were hardest hit by the Reserve Bank's increase in official interest rates and the decision of commercial banks to super-size those increases.

Mortgage rate changes are not measured as part of the official consumer price index.

Families have also been hit by high-priced petrol, spiralling electricity charges, the Federal Government's lift in tobacco excise and the jump in fruit and vegetable prices since this summer's natural disasters.

Wage figures to be released later this week will confirm that working families are going backwards.

Wage growth to February is expected to be 4 per cent, well below the living cost rise of 4.9 per cent.

Welfare recipients have been hardest hit by the increase in alcohol and tobacco excise rates. The cost of living for age pensioners rose 2 per cent in the first three months of the year.

Age pensioners are the biggest spenders of any group on fresh fruit and vegetables.

However, they have been the biggest winners from the supermarket price war over milk, which has dropped almost 10 per cent in price since the start of the year.

Marlene Robins has noticed the pick-up in prices.

The grandmother of three, a project officer for the Council of Ageing WA, said the rise in the cost of fresh produce was the most evident.

"The price of fruit and vegetables has gone up - there has been a price increase across the board," she said.

"It hasn't affected me so much. It would affect people who have to provide for their family more."

CommSec economist Savanth Sebastian said it was clear prices were rising faster than the official inflation rate for particular parts of the country.

"The sharp rise in living costs effectively adds another explanation as to why households have been reluctant to spend," he said.

However, there are some signs that price may be coming down for a major cost for most groups - petrol.

The Australian Institute of Petroleum found the average price of petrol nationally dropped 0.2¢ a litre last week to 145.5¢.

In Perth, the average price lifted 0.2¢ to 145.2¢.

Mr Savanth said with global oil prices falling, combined with the strong Australian dollar, bowser prices could drop by 4¢ a litre by next week.

"The terminal gate price has fallen by 3.5¢ a litre in the past week and as such, motorists are in for some massive savings at the pump in just over a fortnight's time," he said.