Low-income families are bearing the brunt of rising childcare costs despite their eligibility for more generous government subsidies.
An Australian Competition and Consumer Commission investigation into the costs of childcare revealed low-income households forked out five to 21 per cent of their disposable income on childcare.
That's compared to two to nine per cent for those in the highest income bracket.
The consumer watchdog's interim report also found childcare fees had risen faster than inflation and wages during the past four years, lifting 20 to 32 per cent, depending on the type of care.
Government subsidies had taken some of the sting out of that price growth, however.
The regulator found government subsidies had kept out-of-pocket expenses growing at a slower rate over the same four-year period - offsetting more than half of childcare fees, on average.
The federal government launched the inquiry late last year ahead of the start date for its bolstered childcare subsidies that kicked in on July 1.
The government has been alert to worries childcare providers could exploit the increased subsidies and raise fees above and beyond the amount needed to cover their rising costs because of inflation.
Education Minister Jason Clare said the ACCC would be watching to see if providers responded appropriately to the newly bolstered subsidies.
"It’s vital that families are receiving the full benefit of these changes," he said.
Greens education spokesperson Mehreen Faruqi said the consumer watchdog's findings proved families would see little or no difference in their childcare fees despite higher subsidies.
"Over the past few weeks, I’ve been bombarded with reports of providers raising their fees and rendering the government's signature early education affordability reforms a flop," Senator Faruqi said.
The party has been calling for universal, free early education.
The inquiry into the sector has also revealed some unusual market dynamics.
ACCC boss Gina Cass-Gottlieb said the highest fees were often seen in the most highly concentrated markets, which flies against usual competition dynamics.
She told AAP these pockets of expensive but highly concentrated childcare services were, less surprisingly, typically in areas of higher socio-economic advantage.
She said there were a few possible explanations, including higher rents and other operating costs.
"Another possible explanation is that parents are deciding on factors including quality, safety and the engagement of educators, which means they're less price sensitive," she said.
A consultation paper will be published in September and a final report is due before the end of the year.
