How long will the cost of living crisis last and how to beat it

Following another rate hike by the RBA, you’re probably wondering the same thing that I am: when is this cost of living crisis going to end?

Unfortunately, the cost of living crisis is a multi-faceted problem with a couple of causes and, whichever way you look at it, it will be something that we’ll have to deal with for some time. 

However, Australia is well positioned in comparison to the rest of the world, and the May 2023 budget has shown this with increased revenue from high commodity prices. So, keep in mind that no matter how long the cost of living crisis lasts, there is always something you can do to get your money working for you.

RBA’s battle with inflation

Despite hopes that the Reserve Bank of Australia would continue its pause, May saw yet another rate hike in the cash rate to 3.85% with the RBA continuing its war to bring inflation within 2-3%. 

While inflation is one aspect of the cost of living crisis, rate hikes have also affected the average Aussie household due to the current debt levels. According to the Australian Bureau of Statistics (ABS), the average Australian household debt levels grew by 7.3 per cent to $261,492 in 2021-22 which has left many in a vulnerable position to rate hikes. 

So, getting inflation under control and the ensuing rate cuts that tend to follow are a big part of the so-called crisis. 

It’s with looking at the RBA’s Statement on Monetary Policy for May 2023 here, which has laid out its inflation forecasts with Consumer Price Index (CPI) inflation only expected to reach 3% by 2025.

As you can see from the forecast chart, the RBA has found consumer price inflation easing in the March quarter which has confirmed that inflation has passed its peak. Even though inflation is easing, the RBA’s goal is 2-3% inflation which means that there could still be further hikes - and household costs - ahead. 

Energy costs 

Another factor that makes the whole situation pretty complicated is the rising cost of energy, which the RBA suspects will contribute to inflationary pressures over the coming year. It’s not hard to see why, with a fleet of ageing coal fire power stations across the country and a lack of domestically reserved gas supply which has left many feeling their wallets drained from yet another rising cost.

Yet, over the long run, there is hope. With CSIRO and AEMO's GenCost 2021-22 report confirming wind and solar in Australia are currently the cheapest form of energy, in the long run, could lower. However, this is dependent on how fast the government moves to replace supply for the scheduled coal plant closures. 

How to survive the cost of living crisis

So, 2023 could continue to be a difficult year in regard to the cost of living crisis. However, as inflationary pressures start easing in the subsequent years, and the world economy begins to normalise, we should see cost of living pains decrease.

All this being said, and even though a lot of the cost of living crisis is due to factors outside our control, there are steps we can take to lessen the bite in the meantime. Some of these things are:

  • Budget your spending & saving: Making a budget can be a great way to figure out where your money is going and it can help you to make frequent savings every payday. Try out Mozo’s budget calculator, it's free and easy to use so that you can easily start budgeting your income and expenses.
  • Opening up a high interest savings account: One way you can get the rate hikes working in your favour is through a high interest rate savings account. At the current cash rate, a lot of banks have raised their interest rates on savings accounts with some going as high as 5%
  • Refinance your home loan: If you’ve currently got a mortgage, it might be worth considering refinancing your loan for a better deal. Some refinancers offer cashback as part of their refinance package which could be useful for some refinancers. 
  • Get a better deal on energy: If you think your energy bill keeps getting bigger, why not shop around? It’s easy to first check on your property’s tariffs, find cheaper plans or even to ask your current provider for a discount. 

Finally, saving money is integral to any cost-cutting budget. And while savings rates are good, a high interest savings account is worth considering. But not sure which savings account you need? At Mozo we have comparisons of high interest savings account providers so that you can find the one that works best for you.

Savings account comparisons on Mozo

Mozo may receive payment if you click the products below. We don’t compare the entire market, but you can search our database of 274 savings accounts.
Last updated 21 July 2024 Important disclosures
  • Savings Account

    5.35% p.a. (for $0 to $250,000)

    4.75% p.a.(for $0 to $1,000,000)

    Yes up to $250,000

    Bonus variable rate is available for the first 4 months.

    Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.

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  • Reward Saver Account

    5.25% p.a. (for $0 to $1,000,000)

    0% p.a.(for $0 and over)

    Yes up to $250,000

    Intro bonus rate of 5.25% for balances up to $1,000,000 for the first 4 months, reverting to 3.25%. Minimum deposit of $50 and no withdrawals.

    Introductory bonus rate for balances up to $1,000,000 for the first 4 months. Minimum deposit of $50 and no withdrawals. Start your account online in under 10 minutes and earn interest on balances up to $1,000,000 (T&Cs apply). No monthly account fees, helping you save smarter and faster.

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  • Bonus Saver Account

    5.00% p.a. (for $0 to $250,000)

    0.05% p.a.(for $0 and over)

    Yes up to $250,000

    Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.

    Start saving and earn interest with just a $20 deposit and make 5 eligible transactions each month. No fees or penalties for withdrawing money.

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  • Savings+Bonus

    5.00% p.a. (for $0 to $250,000)

    2.00% p.a.(for $0 to $250,000)

    Yes up to $250,000

    Minimum $100 monthly deposit and no withdrawals to earn bonus interest each month.

    Earn a generous interest rate on your at-call savings (T&Cs apply). Interest is calculated daily and paid to you monthly. A $5 monthly membership fee will not apply if your total account balances with First Option Bank exceed $1,000 or you have a credit card or loan with the bank.

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  • Mozo Expert Choice Badge
    Savings Maximiser

    5.50% p.a. (for $0 to $100,000)

    0.55% p.a.(for $0 and over)

    Yes up to $250,000

    For customers who have an Orange Everyday account, deposit $1000 into a personal ING account, make 5 eligible transactions and grow their nominated Savings Maximiser account each month.

    Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^

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^See information about the Mozo Experts Choice Savings Account Awards

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