Personal inflation calculator: Crucial number you need for your budget

The soaring cost of living is hitting some much harder than others. Use our personal inflation calculator to find out instantly how it affects your budget.

Stagnating wages and the ongoing effects of the war in Ukraine will pile on the cost-of-living pain for Australians, but new home and car owners are likely to be hit harder than most.

University of Sydney business analytics expert Andrey Vasnev told news.com.au that inflation was out of control.

“No questions about it,” Associate Professor Vasnev said.

“The RBA is tackling it very, very aggressively, but time will show whether they’re being aggressive enough.”

According to Australia’s Consumer Price Index (CPI) – which measures the official changes to household expenditure – inflation increased by 1.8 per cent in the June 2022 quarter to 6.1 per cent. This also marked a year-on-year increase of 6.1 per cent.

The biggest cost increases were in new dwellings purchased by owner-occupiers (5.6 per cent), automotive fuel (4.2 per cent) and furniture (7 per cent).

Australia’s CPI has shown a 6.1 per cent increase year-on-year. Picture: iStock.

But your personal circumstances determine how much you are affected by inflation.

With the help of experts like Prof Vasnev, News Corp has launched a personalised inflation calculator which determines the extent to which you could be affected by rising cost of living pressures.

The calculator is based on household expenditure data from the ABS, while taking individual circumstances into account.

For example, individuals who recently bought a home, own a car and drive are more vulnerable to inflation, compared to renters who don’t own a car.

Prof Vasnev said insights from the University of Sydney Business School’s Forecast Lab revealed that while the effect of Covid on inflation has reduced, the war in Ukraine will likely be a “long-term affair”.

“There are ships coming in with grain from Ukraine but it’s not in a way comparable to before the crisis,” he said.

“However the sanctions on Russia will take a very long time. This will continue to push the fuel and energy prices up.”

The European Union’s decision to restrict gas imports from Russia, which usually supplies Europe with 40 per cent of its gas needs, has forced countries to cut their usage by 15 per cent in the next seven months.

The inability of Ukraine, the world’s fourth-largest grain exporter, to ship anywere near usual amounts has seen global wheat prices soar from US$7.70 (A$10.97) per bushel to US$13 (A$18.51).

There’s no doubt that the average supermarket shop has become more expensive this year. Picture: NCA

For Australian households, it’s no surprise that the average supermarket shop has also increased.

The cost of food and non-alcoholic beverages increased 5.9 per cent between the June 2021 and 2022 quarters, according to data from the ABS.

While all categories have increased, the biggest jumps were in non-durable household products (10.7 per cent), non-alcoholic beverages (7.9 per cent), fruits and vegetables (7.3 per cent), meat and seafoods (6.3 per cent) and bread and cereal products (also 6.3 per cent).

Stagnating wages are also a factor.

“Wages have stagnated for some time in Australia and it takes quite a while for them to catch up,” Prof Vasnev said.

“There’s no doubt that consumers are already feeling the pinch and they will be the ones to suffer first.”

Fruit and vegetables cost 7.3 per cent more than a year ago. Picture: NCA NewsWire / David Crosling

The continued rising cost of living also means decisions around what households consider “essential” are more important than ever, Prof Vasnev said.

He said his family had implemented measures like cutting their consumption of meat and reducing use of their clothes dryer.

“I think people need to rethink their way of life and focus on what is necessary and what isn’t,” he said.

“Covid was a great teacher and it showed us that things we thought were necessary weren’t necessarily, and the things we were taking for granted are actually very important in our lives.”