Living cost indices published by the Bureau of Statistics yesterday show the increases facing working families, age pension households and welfare beneficiaries have all outpaced the consumer price index.

In the year just gone, working households faced extra costs of 4.5 per cent, aged pensioners 3.1 per cent and welfare recipients 4.5 per cent. The CPI grew 2.7 per cent.

The bureau says there are different reasons for each of the rises. Aged pensioners spend a relatively high proportion of their income on utility bills and fruit and vegetables, the cost of which shot up.

As a group, welfare beneficiaries spend more than most on alcohol and tobacco, which rose sharply in price largely as a result of the 25 per cent increase in cigarette tax.

Working families are highly likely to face mortgage payments, which rose by 30 per cent over the year as a result of four Reserve Bank rate rises and one imposed by the banks themselves. Mortgage increases feed directly into the living cost indices calculated by the bureau but not into the CPI itself. Self-funded retirees fared better though. The bureau says their living costs rose 2.6 per cent, a fraction lower than the CPI. They are unlikely to face too much pain from rising interest rates.

The bureau says this means the CPI is a poor guide to living costs. The CPI is meant to be a measure of inflation rather than living costs, a subtly different concept which is why the bureau produces separate living cost indices.

The good news for pensioners is they get a choice. Their payments are adjusted twice a year in line with either the CPI, the pensioner living cost index or male total average earnings, whichever has increased the fastest.

The unemployed are not so lucky. Their Newstart allowance is adjusted in line with what is usually the lowest of those, the CPI, which the Centrelink website wrongly describes as a measure of changes in the cost of living.