Australia’s Cost-of-Living Crisis

From Stability to Crisis: Australia’s CPI Surge Since 2016 📈




Nimsara Didula Jayarathna Maangodage
Student ID: s4118582


Source: ABS Consumer Price Index, Cat. No. 6401.0 (2025)

What is CPI, and Why Does It Matter?

CPI is more than just a number — it reflects the pressure felt by households every quarter


  • 📊 The Consumer Price Index (CPI) tracks changes in the cost of essential goods and services.
  • 🏠 It covers typical household spending: food, rent, fuel, health, and education.
  • 📈 When CPI rises, it means everyday life becomes more expensive.
  • 💡 It’s Australia’s key measure of inflation — and the best way to track the cost-of-living crisis.


CPI growth spiked in 2022 after years of stability.

The Spike That Shook Australia

  • 📉 CPI fell sharply in 2020 during COVID lockdowns
  • 📈 Then surged to 7.8% in 2022 — the steepest spike since 2016
  • 💸 That’s a single-year rise — e.g., $100 of groceries became $107.80
  • 📉 Inflation slowed in 2025, but overall prices remain well above pre-COVID levels

The Grocery Basket Squeeze

  • 🥦 Vegetables rose 6.6% — that means a $30 veggie shop now costs nearly $32
  • 🍞 Bread inflation cooled from 7.2% to just 2.7% by Mar-25
  • 🧀 Dairy prices went negative (–0.2%) — rare relief at the fridge
  • 🥩 Meat rebounded from deflation to 4.3% — prices are climbing again

Where Rent Hit Hardest

  • 🏡 Perth leads with an 8.9% rent surge — the sharpest jump in Australia
  • 📊 Brisbane, Adelaide, and Melbourne follow close (5.5–5.8%)
  • 🧊 Hobart saw a rare decline of –1.3%, easing pressure on renters
  • These city-level gaps reveal just how uneven housing inflation has become


Education Inflation Hits Hard

  • 📚 Education costs surged significantly post-COVID.
  • 🏫 Secondary education jumped +6.4% in March 2025.
  • 🎓 Tertiary fees spiked +9.7% in 2023 — driven by indexation changes.
  • 🧾 CPI is only released each March — but captures consistent yearly pressure.


Are We Really Better Off?

  • 📉 Headline CPI fell from 7.0% (2023) to 3.4% (2025)
  • 🏠 But Rent rose: 4.9% → 5.5%
  • 📚 Education barely dipped: 5.9% → 5.2%
  • 🥦 Groceries eased slightly: 4.1% → 3.7%
  • 🧾 Essentials outpace overall CPI — core cost pressure remains

What the Data Tells Us About the Cost of Living

  • 🧾 Overall CPI is falling, but core essentials haven’t eased equally.
  • 🏡 Rent and education costs are still rising — hitting low-income households hardest.
  • 🥬 Grocery prices remain unpredictable, making budgeting tough for many.
  • ⚠️ Inflation is stabilising, but real-life cost pressures remain high for basic needs.
  • ❎ Policymakers should focus on category-level trends, not just overall averages.
  • 🔍 Future work could explore income effects or region-wise trends to guide smarter support policies.

Takeaway: Falling CPI doesn’t mean relief for all — essentials like rent, groceries, and education remain under pressure.

References

Australian Bureau of Statistics. (2025). Consumer Price Index, Australia, March 2025 [Data set].
https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release#data-downloads