Australians 'better off' despite economic conditions

The average Australian is $425 a month better off than they were six years ago, despite rising living costs brought on by record petrol prices and interest rates, a new survey has found.

According to the study by broker and fund management firm Commonwealth Securities (CommSec), some consumers are suffering from the higher prices but it is "by no means the rule" that the majority of Australians are finding it hard to make ends meet, news.com.au reports.

"Living costs have certainly been rising, but so have wages," the company's chief economist Craig James told the site.

He added that consumers are also set to benefit from an upcoming round of tax cuts, which represent the "sixth consecutive" reduction in tax thresholds or rates.

Figures from the study show Australians who took out an average home loan in July 2002 would now be earning $1,014 a month more.

Interest rates on their loan, meanwhile, would have increased from 6.55 per cent to 9.45 per cent - raising their repayments by $299.16 a month.

Over the same period, the typical cost of the goods and services they consume rose $287.20 - leaving them, in theory, $427.64 a month ahead, Mr James said.

However, people in other scenarios may not be faring so well. Those who took out a home loan more recently were more likely to have experienced a decline in their net income, the site said, as cost increases have outweighed their wage rises and tax cuts.

Nevertheless, Mr James said higher pay and lower taxes have on the whole put more money in people's pockets as time has passed.

As a result, he predicted, consumer spending will recover once Australians filter through scare stories about the rising cost of living and "realise they can indeed continue to spend".

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