Ever tapped your card for a loaf of bread and felt like you were being robbed in broad daylight? You’re not imagining things. Groceries, rent, fuel—even your Friday night takeaway—are getting pricier by the day. Australia’s cost of living crisis is a real thing, and Aussies are tighter than ever.

Inflation peaked at a scorching 7.8% in late 2022—the highest in over three decades—thanks to a cocktail of global chaos, local disasters, and supply chain meltdowns. While things have cooled off a bit since then, it’s not exactly back to normal.

As of December 2024, the annual inflation rate has settled at 2.4%, which technically falls within the Reserve Bank of Australia’s (RBA) target range. But don’t let that stat fool you—core inflation, which strips out the more volatile stuff, is still sitting at 3.2%, meaning prices are staying sticky in all the wrong places. In other words, even though inflation isn’t raging like it was in 2022, we’re still paying more than we used to—and feeling every cent of it.

But what’s actually causing this madness? And more importantly, how do you survive it without getting sucked into a debt spiral? Let’s break it down.

Inflation: What It Is, and Why We’re All Feeling the Burn

In plain English, inflation means the general rise in prices over time. It’s like a slow leak in your wallet—your dollars don’t disappear, but they buy less than they used to. A bit of inflation is normal, even healthy. The RBA actually wants inflation to sit in the 2–3% range because it signals a growing economy where people are spending, businesses are investing, and wages (ideally) are rising too.

But when inflation spikes beyond that sweet spot, things go pear-shaped. All of a sudden, the cost of your weekly groceries, rent, fuel, electricity, and even that cheeky Friday night parmi at the pub start creeping up—not just by cents, but by dollars. And unless your income is climbing at the same pace (spoiler: it usually isn’t), you’re effectively earning less. Your money loses value faster than a Paddle Pop melting on a 40-degree day—you’re running just to stay in the same spot, financially speaking.

This is the heart of Australia’s cost of living crisis—where prices surge, but wages can’t keep up. Worse still, high inflation doesn’t hit everyone equally. It hurts low to middle income earners the most because a larger chunk of their income goes toward essentials like food, housing, and utilities—the very things that have seen the biggest price hikes.

It’s like trying to put out a bushfire with a garden hose, while the bloke next door has a firetruck on standby.

Why is inflation so high right now?

Here’s what’s been fuelling the inflation bonfire Down Under:

1. Global supply chain chaos

Remember when the pandemic turned the world upside down? Yeah, we’re still copping the economic aftershocks. COVID-19 shut down factories, clogged shipping routes, and slowed the flow of goods. Fewer goods + steady demand = higher prices. Textbook economics, but unfortunately, we’re living it.

2. Russia’s war in Ukraine

This one’s a doozy. The war in Ukraine threw global supply chains into chaos, especially for oil, gas, and wheat. With less of these essentials available—and demand still high—prices surged. That meant fuel and electricity costs jumped, and so did the price of basic foods like bread and pasta.

Because Australia relies so heavily on trucks to move goods around, higher fuel prices pushed up the cost of almost everything—from your weekly shop to building supplies.

3. Local disasters and climate events

In early 2022, severe flooding struck New South Wales and Queensland, devastating crops and infrastructure. The Northern Rivers region of NSW, including towns like Lismore, faced catastrophic floods between 27 February and 2 March 2022, leading to significant agricultural losses.

Similarly, South East Queensland experienced intense rainfall from 22 February to 5 April 2022, resulting in widespread damage to farms and food production.

These events severely impacted fresh produce availability, causing prices to skyrocket. A stark example was the cost of lettuce reaching $12 per head in mid-2022, highlighting the financial strain on consumers.​

4. Wage growth that didn’t keep up

Here’s the kicker: wages haven’t matched price hikes. While inflation soared, real wages actually went backward, meaning you could technically be earning more but still afford less.

According to the Australian Bureau of Statistics (ABS), average weekly earnings only rose 3.6% in the 12 months to November 2023—far below the peak inflation rate.

5. Corporate price gouging (yes, really)

Big companies aren’t exactly doing it tough. According to research from the Australia Institute, corporate profits—not wages—have driven over 69% of inflation since 2019.

In other words, some big businesses have used inflation as a sneaky excuse to hike their prices way more than they needed to. Sure, their costs might’ve gone up a bit—but instead of just covering that, they’ve padded their profits and blamed it on “rising costs.”

How to Navigate This Mess Without Drowning in Debt

Let’s get one thing straight: you’re not bad with money—Australia’s cost of living crisis is just bloody brutal right now. And while it might feel tempting to slap expenses on a credit card or take out an unsecured loan, that can turn a short-term problem into a long-term nightmare.

Here’s how to stay financially afloat without sinking deeper:

1. Budget Like a Boss

Yes, it sounds boring—but budgeting is your financial seatbelt. The trick? Keep it simple:

• Track every dollar: Use a good money tracking app like PocketSmith to get a full view of where your money’s going and forecast where your money will be.
• Sort your expenses: Essentials (rent, bills, groceries), lifestyle (streaming services, dining out), and savings. what can you cut? What can you do to tighten the budget belt? Follow the link here to read my article on how to sort out your finances in simple steps and learn to save.
• Automate your savings: Even $10 a week adds up over time. Make it a habit, not a chore.

2. Slash Costs (Without Going Full Hermit)

Austerity doesn’t mean you have to live off two-minute noodles and sadness. Try these:

• Switch and save: Use sites like Energy Made Easy to find cheaper energy providers. Same goes for insurance, phone plans, and even groceries (hello, Aldi).
• Bulk buy smartly: Non-perishables and cleaning products often cost less when bought in bulk. Think of it as a tactical strike at Costco: skip the 4kg tub of mayo (unless you’re into that) and go for the stuff you actually use every week.
• Meal plan: Reduce food waste and keep your grocery bill leaner than a gym bro’s chicken breast.

3. Use Government Help—Seriously, It’s There

Lots of people don’t realise how many support options exist. Check:

• Centrelink and Services Australia: servicesaustralia.gov.au has support for rent, energy bills, parenting, unemployment, and more.
• State-specific rebates: Each state has help available, from energy rebates in NSW and VIC to transport concessions and emergency relief payments.
• Free financial counselling: The National Debt Helpline (1800 007 007) offers non-judgemental, expert advice if you’re struggling with bills or debt.

4. Ditch Unsecured Debt Where Possible

Unsecured loans and credit cards can seem like a lifeline—but they often come with interest rates north of 20%. That’s not a lifeline, that’s financial quicksand.

Instead:

• Consolidate: If you’ve got multiple debts, look into a lower-interest debt consolidation loan or 0% balance transfer card for your credit card.
• Negotiate: Ring your bank or lender and ask for a better rate. You’d be surprised how often it works.
• Ask for hardship assistance: Most lenders have hardship teams who can pause payments or reduce interest for people doing it tough.

5. Start a Side Hustle (If You Can Swing It)

From selling stuff on Marketplace to doing pet-sitting, tutoring, or casual freelancing—extra income can take the edge off.

• Time-rich but cash-poor? Try platforms like Airtasker, Upwork, or even starting a micro-business selling homemade stuff on Etsy or eBay.

Important caveat: Don’t burn yourself out. Financial resilience isn’t about hustling 24/7—it’s about being smart and sustainable. Follow the link here to see the top 10 side hustles in Australia that actually pay!

Final Word: It’s Not Just You, It’s the System

Let’s be honest—what we’re experiencing isn’t just a personal finance issue. Australia’s cost of living crisis has turned essentials into luxuries and stretched household budgets thinner than ever.

But here’s the good news: you’re not powerless. By understanding why costs are up and using practical, proven strategies, you can ride out the storm without digging yourself into a hole. It won’t always be easy, but it is doable.

So the next time you’re standing in Woolies debating between brands of toilet paper or sweating over your next power bill, remember: this isn’t your fault—but with the right tools, you can take control.