Australia / Press Releases
Baby blues: The cost of raising infants in 2019 rises by 26.3%
by James Caldwell
Feb 18 2019

With the holiday period now well and truly over, and children of all ages back in school or childcare, industry research company IBISWorld has revealed that the cost of raising a newborn from birth to four years old has risen by 26.3% over the past five years. In 2018-19, analysts estimate that Australian parents will spend over $13.2 billion on nappies, clothing, furniture, toys, footwear and childcare for their little ones. This equates to approximately $3,577 per child excluding childcare annually, and up to $7,918 per year including childcare.

“Childcare costs constitute the most significant expenditure for new parents, and childcare centres are therefore the largest benefactor of baby spending. It is estimated that 45% of Australian children aged 0-4 years attend day care services,” said IBISWorld Senior Industry Analyst, James Caldwell. 

According to IBISWorld, the rise in the rate of maternal labour force participation has been the primary driver of demand for child care services, with the Child Care Services industry expected to generate $7.3 billion from parents of children under the age of 4. This works out to an average of $4340 per child annually.

“Formal childcare options are most common for children aged 12 months to four years old, but the use of nannies has also increased over the past decade due to the increased flexibility offered by these services and the growing difficulty in securing a spot in formal childcare,” said Mr Caldwell. 

Outside of childcare – clothing, food and nappies are estimated to be the next largest expenditure categories by parents, with furniture rounding out the top five child-related expenses.

 

Spending Trends

Product/Service

Revenue
2013-14
($ million)

Revenue
2018-19
($ million)

Change
%

Average amount
spent per child
2013-14
($)

Average amount
spent per child 2018-19
($)

Nappies

794

1013

27.5%

515

606

Clothing

1298

1084

-16.5%

841

649

Food/Nutrition

1407

2050

45.7%

912

1227

Furniture

656

737

12.4%

425

441

Toys

467

421

-9.8%

302

252

Footwear

153

204

33.6%

99

122

Childcare

5300

7254

36.9%

3434

4340

Other Merchandise

406

468

15.4%

263

280

Total

10481

13233

26.3%

6790

7918

 

Clothing, furniture and toys

While total expenditure on baby products has risen by 26.3% over the past five years, the composition of this expenditure has changed. IBISWorld analysts have found that products such as clothing, furniture and toys have declined as a proportion of expenditure over the period.

“This decline is largely attributable to the high-cost of manufacturing in Australia. Demand for these product segments has increasingly been met by cheaper imports from low-cost manufacturers in nearby Asian nations,” said Mr Caldwell.

In addition, the rising popularity of online shopping over the past five years has also reduced expenditure on these products.

“Online-only operators can generally retail products for lower prices than their bricks-and-mortar counterparts, due to lower overhead costs,” said Mr Caldwell.  

According to IBISWorld analysts, these trends have driven down expenditure on these product categories, negatively affecting the performance of the Clothing Retailing, Toy and Game Retailing and Furniture Retailing industries.

 

Food and nutrition

In contrast, the expenditure on the food and nutrition product segment has risen strongly over the past five years, reaching an average of $1,227 per child annually.

“The increase in expenditure on food and nutrition has largely been driven by rising health consciousness and effective marketing campaigns highlighting the nutritional needs of babies. Consequently, demand for nutrient-added and organic products has skyrocketed over the past five years, driving up expenditure on food and nutrition,” said Mr Caldwell.  

“The rising rate of maternal labour force participation over the period has also contributed to this increase, as parents often opt for convenient and nutritious baby food products to ease the pressure on busy schedules,” Mr Caldwell continued.  

 

Nappies

According to IBISWorld, parents have also increased their expenditure on nappies over the past five years. It is estimated that parents will spend on average $606 per year on nappies for each child under the age of four.

“Expenditure on nappies has risen as a result of parents opting to purchase higher quality domestically produced nappies, as opposed to cheaper imports. In addition, there has been a trend away from disposable nappy products, towards reusable cloth nappies, placing the Sanitary Paper Product Manufacturing industry under increasing pressure,” said Mr Caldwell.

IBISWorld analysts believe this trend has been driven by rising public concerns over environmental and sustainability issues, as reusable products reduce the volume of waste that ends up in landfills.

“While these products are reusable, they retail for substantially higher figures than traditional disposable nappies, contributing to the 27.5% growth in nappy expenditure over the past five years,” said Mr Caldwell.

 

Modern families

The structure of the family unit has continued to change over the past five years, with an increasing number of women waiting until later in life before having children. The average age of a woman having her first child has risen from 30, to closer to 32 over the past five years.

“In addition, trends such as rising obesity levels have contributed to an increase in the incidences of infertility among Australian couples. It is estimated that 1 in 6 Australian couples contend with fertility issues. Furthermore, there has been in increase in the number of single women and same-sex couples seeking to have children over the past five years,” said Mr Caldwell.

IBISWorld analysts believe these trends have contributed to rising demand for fertility services, particularly IVF, over the period. As a result, the Fertility Clinics industry’s revenue is expected to exceed $550 million across 2018-19, representing considerable growth over the past five years.

“Growing acceptance of these alternative methods of having a child, as well as expected advancements in medical technology, should significantly boost the demand for fertility clinics over the next five years,” said Mr Caldwell.

 

IBISWorld Industry Reports used in this release:

Sleepwear, Underwear and Infant Clothing Manufacturing in Australia

Sanitary Paper Product Manufacturing in Australia

Toy and Game Retailing in Australia

Baby Food Manufacturing in Australia

Clothing Retailing in Australia

Child Care Services in Australia

Online Baby Product Sales in Australia

Fertility Clinics in Australia

Number of births

 

For more information, to obtain industry reports, or to speak with an analyst, please contact:

Kim Do

Strategic Media Advisor – IBISWorld Pty Ltd
Tel: (03) 9906 3641 Mobile: 0422 773 995 
Email: kim.do@ibisworld.com