50 years of inflation

Market Morsel

The Australian Bureau of Statistics (ABS) have released some inflation adjusted price data from 1973 to 2023 to show how prices have changed for several common expense items from the day to day Australian budget over the last fifty years. The standout killer item, in more ways that one, has been the cost of a packet of cigarettes which has increased (in real terms) by 784% from 1973 to 2023. A pack twenty five smokes in 1973 was $0.49, which after adjusting for inflation, to bring the cost into equivalent 2023 dollar values makes it $5.44. However, a pack of cigarettes nowadays costs about $48.10 according to the ABS data so that represents a huge inflationary lift in real dollar terms.

In terms of food items, a loaf of bread has seen a pretty decent lift in the last five decades posting a 91% increase in real terms from $2.30 in 1973 inflation adjusted (2023 dollar value) to an actual 2023 price of $4.40 per loaf, according to the ABS data. Interestingly, the loaf cost has increased substantially while the cost of a kilogram of flour has dropped 28% over the same time frame.

Surprisingly, a cut of rump steak has actually dropped by 5% over the fifty year period. The 1973 value (in 2023 dollar terms) was $35.70 per kilo versus the $34.00/kg being paid today based on the ABS figures. Important breakfast staples such as bacon and eggs have seen price falls in real terms of 30% and 36%, respectively. But another key breakfast consumption item, beer*, was up by 49%.

Road travel has clearly become much more expensive with fuel increasing by 80% and diesel up by 89%. However, airfares have become much more competitive with the cost of a ticket on the Sydney to Melbourne return leg down by 55%. At least the average wage level has increased marginally to compensate somewhat, posting a 12% gain from 1973 to 2023.