Dividends Down Under Inflation Study Launch

By | July 26, 2016

Inflation study - dividends down under blogAuthor: Mr and Mrs DDU.

Before you read this, if you haven’t already read our reasons for doing an inflation study, please have a read of it here.

Essentially, inflation is everywhere; businesses want to increase their prices, house owners want their main asset to go up in value, landlords want to increase their rent. We must grow our income to combat this. To show how important it is that we invest and to show inflation in ‘real time’, we are going to run a study showing how things increase in price. We will track a number of different products/services, updating our study over time to show the changes in price.

All products mentioned are sold in Australia and will be tracked in Australian dollars – the inflation will be a reflection of the Aussie economy.

So what are we tracking?

2016

  • The Government’s suggested annual living costs for a comfortable couple – $59,236
  • (Mean) Average Australian House Price – $613.9K
  • Average Australian House Rent per Week – $490 per week
  • Water price per kilolitre – $2.6221 per kilolitre
  • Aldi food basics basket (1 loaf of quality white bread $1.89, 700g carton of 12 free range eggs $4.39, 1kg of Australian ‘tasty’ cheese $6.99, 1kg of free range chicken breast $13.99, 1kg of pink lady apples $3.49, 2kg washed potatoes $2.99, 375g of Nutella $4.59, 500g regular salted butter $2.59, 455g of Vegemite $6.99, 12 rolls of toilet paper 2 ply $3.49) – $51.40
  • A2 Milk 2L (priced from Coles supermarket) – $4.70
  • Current Year Toyota Corolla Ascent Hatchback Silver (from Toyota Australia Website), automatic transmission no add ons – $25,779 driveaway price (includes Govt taxes)
  • Newest iPhone (from Apple Australia website), 6S 4.7 inch screen silver, 16GB ($1,079), 64GB ($1,229) and 128GB ($1,379)
  • Direct Return Flight (1 stop, under 25hours) with Qantas from Sydney to London (from Qantas website) booked for 3 months from today, returning 2 weeks later.  $748+$894= $1,642
  • 4Kg of Royale Canin Indoor Dry Cat Food (from Petbarn website) – $59.95

So there’s all our starting numbers, it doesn’t look exciting right now, we basically just told you how much a bunch of random things cost (you really wanted to know how much cat food costs in Australia didn’t you?). We’re interested to see how these prices change, particularly for services that have been getting cheaper recently (such as milk and flights). We’ve hopefully covered a good breadth of different products and services. As the years trickle by, we’ll hopefully have lots of interesting comparisons.

What are you doing to combat inflation? What item we’re tracking do you think will increase the most in price (in %) by this time next year?

Thanks for reading this article about our financial journey Down Under.

Onwards and upwards!

36 thoughts on “Dividends Down Under Inflation Study Launch

  1. Stefan - The Millennial Budget

    I hope the flights to Australia go down so I can come over sooner than I expected! Based on the list I have a feeling rent may go up the most. Millennials like to rent rather than buy right now so this may naturally bump up those prices but it should be very interesting to watch!

    1. Dividends Down Under Post author

      Hey Stefan,

      I hope the price comes down for you too 🙂 I can’t see it going that much lower for a while unless fuel gets even cheaper.

      I see where you’re coming from with the rent. Millenials will increase the demand, but it’s projected a huge amount of excess apartments are going to completed over the next few years – so the supply side will be even higher. We’ll see what happens, for our (renting) sake I hope prices decrease 🙂

      Mr DDU

  2. wealth from thirty

    I think this is great. Love that the cat food made it’s way there (it would be kind of fun if you could source the price of a cat too!).

    1. Dividends Down Under Post author

      Hey WFT,

      I’m glad you like the inflation study idea still, now that it’s launched. We like that we included the cat food – we included human food, why not our cat’s too 🙂 If you searched enough, you could probably get a kitten for free, haha, but I see what you mean. Cats would probably also be influenced by supply/demand – would kitten prices surge just before Christmas?

      Mr DDU

        1. Dividends Down Under Post author

          Haha, I haven’t heard of such a thing yet. Maybe cats are a trade-able food ( 🙁 ) in Asia like beef and that way you could trade kittens!?

          Mr DDU

  3. The Green Swan

    Awesome project, it’ll be fun to track over time. I’ll be interested to see how the flight cost changes. It may be more difficult to track given the fluctuation of price based on time of year, the day of the week traveled, and how much time in advance the ticket is bought.

    1. Dividends Down Under Post author

      Hey JW, glad you like the idea of it.

      To get the price of flights, we went for 3 month’s from yesterday’s Australian date (Wednesday 26th October) departure date and returning 2 weeks later (Wednesday 9th November). So whether we update this 6 monthly or yearly, it should have reasonably similar pricing factors.

      Mr DDU

  4. Chris @ Sleepy Capital

    Very cool project, I look forward to following how it goes. I just learned of your website and am not very familiar with the Aussie economy, but my best educated guess is rent / living cost. I’ll be interested in finding out which item increases the most!

    1. Dividends Down Under Post author

      Hey Chris, thanks for coming and checking out our blog 🙂

      I’m glad you like the idea of our study, we’ll see if your guess is right!

      Mr DDU

  5. amber tree

    Good luck with the project.

    How will you deal with the iPhone price changes? Apple will for sure add some cool new features and hardware.

    1. Dividends Down Under Post author

      Hey ATL,

      That’s the beauty of the study, we will just record whatever the changes are, as that’s what has happened.

      Mr DDU

  6. The Jolly Ledger

    It will be interesting to compare your selected items to country averages of inflation by year. I’ll be following!

    1. Dividends Down Under Post author

      Hey Jolly Ledger,

      I’m glad you find this interesting and I hope it yields some interesting results 🙂 Thanks for following.

      Mr DDU

  7. Vicki@Make Smarter Decisions

    Really interesting project! We do very little to plan for inflation actually. We don’t even raise the rents on our renters. I will follow with interest to see what happens here!

  8. Len

    This is great idea! I’m interested in a number of those numbers. In particular, the annual costs for a comfortable lifestyle for a couple. Ours are a little lower than this figure and that if including our 5 year old.

    I’ve only recently started following you guys so keep up the good work!

    Len

    1. Dividends Down Under Post author

      Hey Len, thanks for visiting our blog and commenting! – How did you find us? We love Aussie readers.

      The annual costs are actually for a retired couple (so your kid would have moved out if you’re comparing).

      Mr DDU

  9. Life We Learn

    This is a fascinating project! It will be interesting to see how these numbers change over the years. Housing really is a killer expense in Australia, so much of our income goes towards that.

    1. Dividends Down Under Post author

      Hey LWL,

      Thanks, I hope the results are as fascinating as the idea! We hope you follow our study for the years to come, I bet at least one of these throws up an unexpected result.

      Mr DDU

  10. Finance Solver

    Average Australian home project is a lot of money! This is a great idea. After this, would like to see if you have any thoughts on deflation.

    1. Dividends Down Under Post author

      Hey Finance Solver,

      Yeah they’re pretty expensive, though not that bad. Remember that Australia only has 24M people, and most of us live in our state capital cities (Sydney and Melbourne have over 4M people each, Brisbane & Perth & Adelaide each have over 1M people). So if you just took the property prices from New York, LA, San Francisco, Chicago etc then you’d get a better comparison. Other than city-countries we are probably one of the highest urbanised populations in the world.

      Glad you like the idea, I think deflation would also be interesting. I think a couple of the things we’re following may drop in price.

      Mr DDU

  11. FinanceSuperhero

    This is an interesting study! I typically don’t pay much attention to inflation, to be honest, but I probably should. I’m surprised by the mean house price in Australia!

    1. Dividends Down Under Post author

      Hey FSH, thanks for the comment.

      I’m glad you find our study interesting. Like I said to Finance Solver, the prices are mainly because we all live in large cities. If you just took the prices of New York, Miami, Boston etc then that would be a much closer comparison

      Mr DDU

  12. John

    Hi there,

    As people above have mentioned and from people I’ve spoken with, the housing prices seem to be ridiculous over there. Great for property owners but definitely a much higher barrier to entry for younger folks. You guys also seem to be getting screwed by iPhone costs thanks to the USD!

    I combat inflation by holding physical assets, mostly real estate and a little bit of gold. I would buy oil (physical) if I could. With governments printing money around the world, I believe severe inflation is a real risk and people hoarding cash will lose.

    For your other question, I believe real estate is the easiest thing to inflate because many houses are purchased via financing. A 100,000 increase in price may only result in a few hundred dollars per month which buyers may live with. Last I checked, McDonalds still has a dollar menu for the past 10 yrs!

    1. Dividends Down Under Post author

      Hey John, thanks for commenting 🙂 You’re right, property is expensive in Australia – mainly because most of us live in cities. So we’re just as crazy as New York, San Fran, Miami, Boston etc.

      I agree that everyone should have income earning assets, to combat hyper inflation as well just for wealth building in general.

      Real estate is the easiest to inflate as long as the financing is there and people are willing to pay, whether those factors remain over the next few years, we’ll see..

      Mr DDU

  13. Jeff

    I think food and necessities is the easiest thing to increase. Everyone has to eat and if every food venders increase their prices, people will still have to buy.

    1. Dividends Down Under Post author

      Hey Jeff,

      Correct, everyone does still have to buy – however interestingly in Australia with the introduction of Aldi, all our supermarkets are actually REDUCING prices. They’d have to work as a cartel to increase their prices, if just 1 or 2 did it, people would just go to the other supermarket.

      Mr DDU

  14. J @ Hey It's Just Money!

    Hey guys, this is really cool, thanks for starting this project. It will be interesting to see the changes in your next update. My heart ached a bit when I saw the average house price. Ugh. Are you planning to give a state breakdown on that?

    I hope you’re doing well and happy Friday!

    1. Dividends Down Under Post author

      Hey J,

      I’m glad you like it and hopefully it shows interesting results 🙂 We could do a state breakdown I guess, what do you think of that idea?

      We are doing well, I hope you are too 🙂

      Mr DDU

  15. Jef Miles

    Cool study here man, loving it! 🙂
    Looking forward to seeing the results in 6 or 12 months time, how often are you going to be tracking it?

    Are you heading to London soon? Or is that an example 😉 haha

    1. Dividends Down Under Post author

      We haven’t completely decided between 6 & 12 months – 6 may be too often for prices to have meaningfully changed.

      The London flight was an example 🙂 Once we reach financial independence I’m sure London will be one of the places we occasionally visit.

      Mr DDU

Comments are closed.