Inflation Express

by | Dec 14, 2011 | data, Inflation, public transport

I’m not usually one to plan in advance nor buy in bulk, but with regards to Melbourne’s public transport, I might be convinced otherwise. Last week’s announcement of the upcoming 9% increase in train tickets (as well as bus and tram) has compelled me to buy my 2012 train tickets at what are still genuine 2011 prices.
Over the past two decades, Australia has kept inflation between 2 and 4% per annum. And yet, I find myself reminiscing the days when I could purchase a book of 10 bus tickets for $4.50. Being mindful of the concession price variable, and the fact that I was still wearing Brut (high school boys’ top selling deodorant!) the $4 per ticket I will be paying come January still appears a little inflated. To get a better idea of how this latest increase fares, I compared it to previous movements. With public transport data going as far back as 1972, the ABS’ CPI shows an interesting trend over the past few decades.
Throughout the 70s and 80s the increase in public transport prices mirrored that of the overall basket of goods. That is to say, the price of catching a train increased at similar rates to most other common goods. From 1990 onwards, however, the cost of buses, trams and trains has increased at a rate much higher than inflation (which includes housing costs, education, bananas, recreation and health, etc etc). While the cost of living in Melbourne increased 79% since 1990, by the time I sober up on New Year’s day, Melbourne’s public transport will have increased 190% in the same period.
Public transport’s elevated inflation is not only a Melbourne issue. Public transport has outgrown inflation by 97% across all of Australia’s capital cities. The graph below shows how Australian capital cities fare in terms of transport inflation compared to the overall Australian CPI.

(this google motion chart is not currently working… attempts will be made to reinstate it)

In the meantime… here is a temporary graph with similar data.

Public Transport Inflation

This phenomenon is made more remarkable when considering that the inflation for private motoring costs (including vehicle costs, fuel, parking, registration etc) has been lower than the total basket over the last few years. While the increase in cost of public transport is almost twice that of the overall basket, private motoring costs have increased 15% less than CPI since 1990.

I won’t speculate as to the reasons for this divergence.  Suffice to say that if we’re trying to encourage people to jump on the public transport bandwagon, a little economic incentive wouldn’t hurt.