The Cost of Living Crisis
Krishiv Kadve
2025-06-11
Inflation Then and Now
The chart above shows Australia’s annual inflation rate from 2016 to 2025. For much of the late 2010s, inflation was steady and relatively low, around 2%. However, from 2021, we see a dramatic surge, peaking at nearly 8% in the end of 2022. This spike reflects the combined impact of global supply chain disruptions, the economic aftermath of COVID-19 lockdowns, and rising energy prices due to the war in Ukraine. While inflation has eased since then, it still remains well above pre-pandemic levels, meaning the cost of living is still rising faster than before.
How Fast Are Prices Rising?
This bar chart highlights how quickly prices have been rising from quarter to quarter. For most of the past decade, quarterly inflation stayed well below 2%. However, in late 2021, the pace of price increases accelerated sharply, with one quarter exceeding a 2% rise—the fastest rate in recent history. This increase reflects the sudden impact of pandemic recovery, disrupted supply chains, and global shocks.
What’s Driving the Cost Surge?
The breakdown above reveals which everyday costs have risen the most over the past year. Alcohol and tobacco, education, and health have seen the steepest price increases. Essential categories like housing, food, and insurance have also climbed significantly—placing a heavier burden on household budgets. This chart makes it clear that while inflation touches everything, some expenses—especially those that are hard to avoid—are rising much faster than others.
Are Our Paychecks Keeping Up?
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This line graph compares how inflation and wages have changed over time. While both moved in tandem before 2021, a sharp divergence appeared during the cost-of-living crisis. The red line (CPI) shows inflation surging to nearly 8% in 2022 and 2023, far outpacing wage growth (blue line), which remained much lower. Even as inflation has started to fall, wages still lag, meaning real purchasing power has declined. This gap explains why many Australians feel worse off, even if their pay packets are technically rising—because their money simply doesn’t go as far as it used to.
Who’s Hit Hardest?
This chart tracks how the cost of living has changed for different types of households. While all groups experienced a spike in living costs during the inflation surge of 2022, households relying on government transfers—like pensioners and beneficiaries—often saw sharper increases and greater volatility. This shows vulnerable groups have been especially exposed to rising essential costs, and may find it harder to absorb price shocks. Even as inflation begins to ease, the persistent gap between household types suggests why some Australians are feeling it much worse than others.