Households enjoy standard of living boost

It may not seem like it at times, but Australians are enjoying a boost in their standard of living for the first time in two years.

A new analysis has found that despite subdued wages growth, households have been better off in the past year thanks to lower petrol and energy prices - the latter as a result of the scrapping of the carbon tax.

The inaugural SAS-NATSEM household budget report shows that cost of living increased by just 1.4 per cent in 2014 while income growth grew by 2.7 per cent.

NATSEM says the difference between the two defines a healthy recovery in the standard of living after zero growth between June 2012 and June 2014.

More recently, the interest rate cut in February showed that while it was a positive for those with home loans it could be a negative for older families who were more likely to have savings accounts than loans.

People over 65 suffered an average loss of $29 per year from the 25 basis point cut in rates, while those aged 25 to 64 were better off by an average of $318.

High-income households were even better off by $536 per year as a result of the Reserve Bank's cut, while low-income earners gained only $38.

The most startling figures in the report released on Tuesday was the financial gain from increasing standards of living over the past 26 years.

Since 1988 the average household is $30,000 better off a year, while households in Western Australia and the Northern Territory have posted an average gain of $50,000.

HOW PRICES CHANGED IN 2014

DEARER - Alcohol, tobacco, food, health costs.

CHEAPER - Petrol, power bills, TVs, audio-visual equipment.

HOW HOUSEHOLD BUDGETS CHANGED

BETTER OFF - NT $4603, NSW $1730, SA $1392, TAS $1351, QLD $944, WA $702, VIC $227

WORSE OFF - ACT $2517

Average household +$988.