Hundreds of dollars worse off: Aussies still doing it tough

Australians are still feeling the pinch of cost-of-living rises even though the rate of inflation is slowing.

Aussies are still feeling the pinch from cost-of-living pressures, and hundreds of dollars worse off, even as the official inflation rate falls towards the Reserve Bank’s target range.

Zyft consumer finance expert Joel Gibson said while hopes of a rate cut had been raised, households still paid hundreds of dollars more for everyday items over the past year.

“The harsh reality is that the big ongoing household expenses families face are still up by hundreds of dollars or more over the past year,” Mr Gibson said.

“While some categories may have eased this time around, other unavoidable expenses have remained high, with education costs increasing by 6.5 per cent, insurance by 5.4 per cent, and health costs by 4 per cent in just 12 months.”

Households are still under pressure even though Australia’s official inflation rate is slowing. Picture: NewsWire / Nicholas Eagar

Overall, the latest inflation print released by the Australian Bureau of Statistics on Wednesday showed the rate of growth slowed, with headline inflation rising by 0.2 per cent in the December 2024 quarter to 2.4 per cent for the 12 months until December 31.

The all-important yearly trimmed mean inflation, which the RBA tracks for rates as it excludes volatile parts of the CPI such as fuel and energy, fell to 3.2 per cent, down from 3.5 per cent in the September quarter.

This beats the Reserve Bank’s forecast for Australia’s trimmed mean inflation of 3.4 per cent for the 12 months until December and 0.7 per cent for the final quarter of the year.

For the quarter, recreation and culture spending rose 1.5 per cent, while alcohol and tobacco is up 2.4 per cent.

Rising costs were offset by falls in housing and transport, which were both down 0.7 per cent, and crashing energy prices off the back of government rebates.

“The 2024-25 Commonwealth Energy Bill Relief Fund rebates led to a large fall in electricity prices this quarter,” ABS head of prices statistics Michelle Marquardt said.

“Electricity prices fell by 9.9 per cent in the December 2024 quarter following a fall of 17.3 per cent in the September 2024 quarter.

“Without the rebates, electricity prices would have risen 0.2 per cent this quarter.”

Automotive fuel prices fell 2.0 per cent this quarter following a 6.7 per cent drop in the September 2024 quarter, reflecting lower global oil prices.

Mr Gibson said while food and non-beverage costs are slowing, households overall were still spending more than this time last year.

“What’s more, food inflation has been patchy overall, with the price of lamb skyrocketing by 17 per cent and vegetables by 6 per cent year-on-year,” he said.

They are still spending more on everyday items even as inflation falls. Picture: NewsWire / Max Mason-Hubers

Separate Finder research, which came out in December at the same time as the CPI data, shows the average Aussie household is now spending $208 on groceries in December, up from $184 in December 2023.

Unsurprisingly, this number is even higher for households with at least one child under 18 at $285 on average per week in December compared with $229 in 2023.

Deloitte Access Economics said Australians’ real purchasing power wouldn’t return to pre-pandemic levels until at least 2030.

“Real wages are now grinding higher, but it is likely to be 2030 before Australian workers recover their pre-pandemic purchasing power,” report author Stephen Smith said.

“Dwelling construction activity is unlikely to get any worse, but Australia’s housing crisis is likely to last at least another decade. And while business investment was a key feature of the economic recovery after the pandemic, it has since faded.”

Originally published as Hundreds of dollars worse off: Aussies still doing it tough