{"id":59016,"date":"2025-08-11T03:01:07","date_gmt":"2025-08-11T03:01:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/59016\/"},"modified":"2025-08-11T03:01:07","modified_gmt":"2025-08-11T03:01:07","slug":"how-inflation-hits-your-hip-pocket","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/59016\/","title":{"rendered":"How inflation hits your hip pocket"},"content":{"rendered":"

The consumer price index, or CPI<\/a> \u2013 the official measure of inflation published by the Australian Bureau of Statistics \u2013 rose 19.2 per cent over the four years to June, far outstripping wages, which grew by 14.1 per cent over the four years to March, the ABS Wage Cost Index shows.<\/p>\n

But many household basics have risen much faster than the overall CPI since mid-2021. This includes eggs (+49 per cent), oils and fats (+46 per cent), bread (+29 per cent) and dairy (+24 per cent). Other essentials to far outstrip inflation are insurance (+39 per cent), gas and other household fuels (+38 per cent) and automotive fuels (+24 per cent).<\/p>\n

Dean Pearson, National Australia Bank\u2019s head of behavioural and industry economics, says the way regular consumers view inflation \u201cis quite different\u201d to how economists see it.<\/p>\n

\u201cConsumers will basically look at a few key anchor prices, things like utility bills, petrol prices, groceries or rents, and those things leave an outsized impression on them,\u201d he says. \u201cEconomists can say that things are improving, but until people actually feel a real, tangible change, they don\u2019t listen to economists.\u201d<\/p>\n

Many consumers had never experienced such a sustained bout of inflation, which may also help explain the lingering concern about cost of living.<\/p>\n

Loading<\/p>\n

\u201cIf you\u2019re under the age of 40, you probably haven\u2019t seen it like this,\u201d Pearson says. \u201cAnd inflation has a very tangible impact on people\u2019s lives.\u201d<\/p>\n

Still feeling the pinch<\/p>\n

Despite a lower rate of inflation, many households are still scaling back spending to make ends meet.<\/p>\n

About half of respondents to NAB\u2019s latest consumer sentiment survey said they had spent less eating out at restaurants and denied themselves \u201cmicro treats\u201d during the past three months due to cost-of-living pressures. Four in 10 had delayed or made more modest holiday plans, and one in three had delayed a medical appointment.<\/p>\n

\u201cThose are very big changes,\u201d Pearson says.<\/p>\n

One in five respondents to the NAB survey had sold possessions during the past quarter to help manage financial pressures, while one in seven had borrowed from friends or family.<\/p>\n

Households were least inclined to cut spending on private school fees and tutors, children\u2019s extracurricular activities (such as music or sport) and spending on their pets.<\/p>\n

There\u2019s evidence the long bout of high inflation has caused lasting changes in consumer behaviour. One example is a boom in the use of cost comparison websites to search for lower prices.<\/p>\n

\u201cConsumers are much more knowledgeable about price changes, and they\u2019re much better researched than they\u2019ve ever been before,\u201d Pearson says. \u201cWe know the number of people who now price-compare before buying anything is really high; I don\u2019t think those things are going to shift.\u201d<\/p>\n

Consumers wary, despite relief<\/p>\n

A lower rate of inflation recently has given the Reserve Bank scope to deliver interest rate relief.<\/p>\n

The official cash rate has already been cut twice this year; financial markets expect the Reserve board to deliver a further 0.25 percentage point reduction on Tuesday and at least one more cut by Christmas.<\/p>\n

Resolve director Jim Reed says opinion polls suggest households are feeling less financial pressure \u2013 while cost of living is easily the top concern of voters, the share rating it as \u201cvery important\u201d has fallen this year.<\/p>\n

\u201cThis suggests that meeting living costs is still problematic for some, but at least is not getting worse for most,\u201d he says.<\/p>\n

Even so, households are wary that another shock could push up prices again; NAB\u2019s survey found 51 per cent of respondents expected inflation to rise in future, up from 48 per cent in the previous quarter.<\/p>\n

\u201cConsumers are now hypervigilant on inflation,\u201d Pearson says.<\/p>\n

Start the day with a summary of the day\u2019s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"The consumer price index, or CPI \u2013 the official measure of inflation published by the Australian Bureau of…\n","protected":false},"author":2,"featured_media":59017,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-59016","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/59016","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=59016"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/59016\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/59017"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=59016"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=59016"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=59016"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}