The cost of running a car for the average Melbourne family has jumped faster than inflation to more than $26,142 a year per household.
Car loan repayments have risen by about $1439 annually for the average Victorian household based on analysis of price increases for the first quarter of 2023, with more pain to come if the Reserve Bank hands down another rate rise this week.
Typical household transport costs are higher in Melbourne compared to nearby Geelong, where the average yearly cost for a family rose to $20,599, according to the latest transport affordability index report released by the Australian Automobile Association (AAA) on Monday.
Servicing and tyre costs also increased by about $70 a year for households and insurance premiums in Melbourne rose by about $317, with the city ranked the second-most expensive for transport overall in Australia.
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The average spend on fuel dropped by about $89 a year in Melbourne and by about $325 in Geelong.
The total weekly transport cost for a Melbourne household is now about $502.73, which is about a $34.06 increase compared to the last quarter of 2022.
Melbourne was ranked third worst out of the eight capital cities for transport affordability when comparing costs to income, with running a car and other vehicle needs amounting to about 17.5 per cent of the average household budget.
The cost of running a car has risen faster than inflation.
According to the AAA report even as Australia’s overall inflation rate eased slightly, transport cost increases “accelerated” to rise by about 7.4 per cent in the March 2023 quarter.
At the same time the Consumer Price Index increased by 1.4 per cent.
Higher upfront costs for purchasing new vehicles have been the biggest driver of increased transport costs for households, which the report said were contributing to “stress” for household budgets already pushed to the limit.
Sydney had the highest overall transport costs, while Hobart had the lowest among capital cities and Brisbane was identified as having the most expensive public transport on average.
AAA managing director Michael Bradley said all levels of government must consider transport cost pressures when developing policies in the current inflationary environment.
“The cumulative effect of continually rising transport costs is a heavy burden at a time when Australians are feeling cost-of-living pressures across the board,” he said.
“Transport is a significant and unavoidable expense for households and is one of the key drivers of inflation.”
Of the four major banks only ANZ has forecast the RBA will hike the cash rate by 25 basis points to 4.1 per cent when the board meets on Tuesday, while Commonwealth, NAB and Westpac economists expect a pause.