Transport cost inflation eases

Despite the consumer price index climbing by 0.2 per cent in the September 2024 quarter, the latest AAA Transport Affordability Index shows that Australian typical household transport spending declined by 2.6 per cent.

The consumer relief was driven by an average $338 reduction in a typical household’s fuel bill, as well as large reductions in public transport costs in Queensland, Canberra and Darwin. It followed a 10.5 percent increase in transport costs in the year to June 2024.

Typical household transport costs fell in all Transport Affordability Index benchmark locations – capital city and regional – except Sydney where higher toll road charges offset lower fuel prices. But even in Sydney, rising incomes more than offset a small increase in annualised transport costs.

Major one-off public transport price relief

There were also substantial public transport fare reductions in Brisbane, Canberra and Darwin. These were big enough to affect the national and capital city averages, but their main impact was in those three cities.

Queensland’s 50 cent fares are a long-term measure, but the ACT and Northern Territory governments offered free public transport only on a temporary basis, so the December quarter Transport Affordability Index will show a rebound in Canberra and Darwin public transport costs.

Varied picture across Australia

In Q3 2024, the consumer price index rose 0.2 per cent but the typical Australian capital city household’s annualised cost of transport fell by $921 to $24,427 – a 3.6 per cent decrease.

However, the cost-of-living relief was not spread evenly. Brisbane’s annualised typical household transport costs dropped by $3,316, or 12.5 percent; Canberra’s by $1,799, or 7.2 per cent; and Darwin’s by $1,416, or 6 per cent.

Across the five other state capitals, the average change in transport costs was only 0.7 per cent.

Falls were much more modest in Melbourne (-$297), Perth (-$104), Adelaide (-$164) and Hobart (-$375).  Cost relief in the Index’s benchmark regional centres ranged between -$195 in Alice Springs and -$436 in Townsville, and the regional average was -1.4 per cent.

Sydney was the sole benchmark location where annualised transport costs rose – up $107 as changes in toll charges offset lower fuel prices. Nevertheless, rising salaries meant the city’s income-to-costs ratio improved.

In the September quarter, transport costs consumed 16.1 per cent of the typical Australian household’s income, down from 17.0 per cent in the June quarter. 

Transport inflation eases but prices remain elevated

This is the biggest quarter-on-quarter drop since Q2 2017. It takes average Australian transport affordability back to where it was roughly a year previously. (Transport costs’ share of typical Australian household income was 16.4 per cent in the September 2023 quarter and 15.9 per cent in the June 2023 quarter).

AAA Managing Director Michael Bradley said inflation relief was welcome but transport costs remained a major pain point for many households.

“Transport costs are significantly higher than they were before the pandemic,” Mr Bradley said.

“The typical Australian household’s transport costs have risen from 13.9 per cent of its income in September 2019 to 16.1 per cent in September 2024 transport.

“Transport is a significant and unavoidable expense, and rising transport expenditure is also one of the key drivers of inflation. Governments at all levels must consider these cost pressures when formulating policy.”