Can’t keep up with the cost of living? Take a dive into the hidden expenses of your budget
Feeling the sting of higher prices? You’re not alone! The cost of living has hit a new high, and it turns out we’re paying for a lot more than just a more expensive world. With the latest statistics from the ABS revealing that the Consumer Price Index (CPI) is now higher than it was during the 2008 financial crisis, we took a look at why exactly your dollar is struggling to stretch.
Are fuel prices driving us all up the wall?
There is definitely some truth to the talk that sky-rocketing fuel prices are to blame for that burn in your wallet. Australians aren’t just feeling that at the petrol pump! Fuel prices have far reaching effects across the board.
The best way to contextualise this is to take a look at what is happening across the globe. From sanctions on Russia amidst the Russia-Ukraine conflict to total shutdowns in China due to virus outbreaks, there’s a volatility in the air. The effects of COVID-19 are still being felt, with demand for fuel rising as restrictions ease across the world.
Rising demand, lower supply and lower restrictions mean that fuel is at the forefront of everyone’s minds. We’re bound to feel this on all manner of imported items - so if your overseas sourced goods start to look a little pricier, fuel could definitely be the culprit.
If you think you’ve solved the problem by sourcing your groceries locally, don’t be so hasty. Local businesses are also facing the current fuel struggles, with transport costs rising on a much closer scale. None of this is to mention the continued devastating effects of bushfires and floods that have left a longstanding impact on the Australian agricultural industry.
The prices of vegetables are up 12.7% on average, while beef is up 12.1% to match, with farms having been hit hard by recent weather conditions. This is the greatest change the local industry has seen since the 2011 cyclones caused a surge in banana pricing, according to Michael Harvey of Rabobank.
Climate change causing a higher frequency of extreme weather events could potentially lead to a greater shift in the prices of your everyday must-haves. It’s just one reason to consider going green with your finances.
Everything just keeps climbing - what about my wages?
We’ve discussed the daily expenses - food, beverages, fuel. What about the bigger ticket items? It’s no secret that the RBA is set to increase rates to course correct after the COVID-19 pandemic, which is noteworthy news for anyone making mortgage payments or considering a home loan. It’s also set to contribute to that already high cost of living, with repayments higher and expendable income a lot tighter.
It would make sense then, that wages would rise accordingly. With unemployment low, hovering around 3-4%, there is some definite precedent to worker demand for higher wages being met.
This isn’t as straightforward as it seems, either. In order to support wage growth and increased employment, businesses need to charge more for the products and services they provide. We can’t escape it - the cost of living is like that clingy friend who just has to involve themselves in everything.
If you’re feeling overwhelmed, there are a few great places to start. Setting up a budget, taking stock of your finances and doing some smart investment can get you set up to take on a tumultuous economy. We’re here to help you through it!
Wondering how to stay afloat with the added influences to your cost of living? Check out our budget planning calculator to help keep yourself on track, and have a read of our 10 easy tips for handling the rising costs.