In 2025, Australian families are experiencing “The Squeeze”—a cost-of-living crisis where everyday essentials are becoming increasingly unaffordable despite seemingly stable headline inflation. This analysis uses the latest Australian Bureau of Statistics data to reveal the pressures behind housing, food, and education costs that are forcing millions of households to make difficult financial choices. While official inflation sits at 2.4%, the real story lies in how these costs are reshaping Australian life and stretching family budgets to breaking point.
Australians are feeling the pinch as living costs continue to rise in 2025. While inflation has stabilised at 2.4%, this masks significant pressures in key areas of household spending.
Key Insights:
Inflation steady at 2.4% for three consecutive months
Still above comfortable levels for many households
Core drivers: Housing, Food, and Education costs
The data reveals that while overall inflation appears controlled, the components that matter most to household budgets continue to rise significantly.
Housing costs continue to be the largest driver of cost-of-living pressures across Australia, with significant variations between cities.
Critical Findings:
Sydney leads with rent consuming 35.5% of median income
Most capitals breach the 30% affordability threshold
Even traditionally affordable cities seeing significant increases
This creates widespread housing stress affecting millions of Australian households, forcing difficult choices about lifestyle and spending priorities.
Food inflation is hitting Australian families where it hurts most - the weekly grocery shop.
Grocery Reality Check:
Dairy products up 6.8% - affecting morning coffee and children’s nutrition
Restaurant meals up 5.2% - making dining out a luxury
Even basic meat and seafood up 4.2%
With restaurant meals showing both high price increases AND high household impact, families are being forced to change fundamental eating habits and social patterns.
The Consumer Price Index shows how different spending categories have diverged since 2020, with housing and education leading the surge.
Category Analysis:
Education: Steepest increases, creating long-term family pressure
Housing: Consistent upward trajectory affecting all Australians
Food: Volatile but trending upward since 2021
Overall CPI: Steady increase masking category variations
This divergence means that while headline inflation appears manageable, specific household pressures vary dramatically based on individual spending patterns.
While Australia’s headline inflation rate of 2.4% might suggest economic stability, this analysis reveals the harsh reality facing millions of Australian households in 2025. “The Squeeze” is more than just economic data, it represents families choosing between mortgage payments and groceries, young people unable to afford rental housing that consumes over 35% of their income, and parents watching everyday essentials like dairy products and restaurant meals go up beyond their reach. The diverging trends across housing, food, and education costs demonstrate that inflation’s impact is far from uniform, creating a complex web of financial pressures that vary dramatically based on individual circumstances. As Australia navigates this cost-of-living crisis, the measure of economic recovery will not be found in stabilised inflation figures, but in whether ordinary families can once again afford the basic elements of a decent secured housing, nutritious food, and opportunities for their children’s education without sacrificing their financial future.
Data Sources:
Australian Bureau of Statistics. (2025, April 30). Consumer Price Index, Australia, March Quarter 2025. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release
Australian Bureau of Statistics. (2025, May 29). Monthly Consumer Price Index Indicator, April 2025. https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/monthly-consumer-price-index-indicator/latest-release
Reserve Bank of Australia. (2025). Measures of Consumer Price Inflation. https://www.rba.gov.au/inflation/measures-cpi.html