Transport costs ease but remain elevated

The Australian Automobile Association’s Transport Affordability Index shows the transport cost reductions were driven largely by lower fuel prices, with prices falling by an annualised $158. The savings on fuel costs offset price rises in other areas.

This follows seven consecutive quarters of rising total household transport costs, and total transport prices remain much higher than they were before the COVID pandemic.

In Q4 2019, the typical Australian household spent 13.9 per cent of its income on transport. In Q3 2022, it spent 14.9 per cent of its income on transport. This peaked at 17 per cent in Q2 2024 and settled at 16.1 per cent in Q3 and Q4 2024.

This put the typical Australian household’s transport affordability back to where it was in mid-2023. (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).

The Index charts changes in transport-related costs such as fuel, insurance, car maintenance and public transport costs.

It also measures transport affordability – or the costs-to-income ratios in Australian capital cities and a benchmark regional centre in each state and the Northern Territory.

Transport affordability varies significantly across the country, as there are disparities between different capitals’ and regional centres’ typical costs and median incomes.

The typical Brisbane household’s transport costs are higher than that of Hobart’s.

But in the December quarter, the disparity in these cities’ typical incomes meant Brisbane was the most affordable capital (spending 14.8 per cent of typical household income on transport) and Hobart the least affordable (spending 18.9 per cent of typical household income on transport).

The capital city average was 16.2 per cent of household income spent on transport and the national average (which includes benchmark regional centres) was 16.1 per cent.

AAA Managing Director Michael Bradley said 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 December 2019 to 16.1 per cent in December 2024. 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.”