Inflation and Pension Indexation
Age Pension indexation
The Age Pension indexation involves a couple of different metrics and for good reason. They are not reliable enough on their own.
Inflation during the December quarter was 0.6 per cent, which brings the annual inflation rate to 1.9 per cent. This is the Consumer Price Index, or CPI.
The Australian Bureau of Statistics also maintains a Pensioner and Beneficiary Living Cost Index (PBLCI). This showed an increase of 0.8 per cent. The annual rate is 2.3 per cent.
The Cost of Living Index for Pensioners showed the same increase as the CPI this time: 0.6 per cent. The annual rate is 2.1 per cent.
This means that in the next round of pension indexation on 20 March 2018, the pension will be indexed using the PBLCI of 0.8 per cent. This is the highest increase compared with wage increases and the CPI.
This means that the pension indexation will be indexed at a slightly higher rate than the CPI in March 2018.