What will hurt you if you put it in the cart? It’s time for our regular inflation check!
The ABS has released its latest official inflation figures for July, August and September and they confirm that prices are rising faster than can be tracked.
The following chart shows key elements: the gas bill, the grocery bill and the gas bill.
First on the list of things that are going crazy is your gas bill. Mine just came in and I paid $246 over the last two months as you can see below. It’s basically the same as last year, although our household used 30 percent less gas than last year! (I’ve been a fiend at turning off the heater).
The next highest increases on the chart are foods. Some things have gone very fast. In my mind, milk still costs a little over a dollar a liter, but in reality, no. Dollar milk is a distant memory. A single liter of milk at Woolworths costs between $1.60, for the house brand, to $3.60 for A2 milk.
At the other end of the spectrum is meat. Lamb and beef didn’t go up much in the last three months, just a fraction of a percent, but of course their prices were already up dramatically.
At the bottom of the graph above is gasoline. Fuel prices fell steadily in July, August and September, leaving the category looking like it was getting cheaper. But remember: This data was taken before the 22-cent gasoline tax was put back on the fuel at the end of September. The next consumer price inflation figure will bring the tax back and, unless oil suddenly becomes very cheap, the current high price of fuel will be reflected in the official figures.
What else moves?
Apparently, increasing even faster than food and fuel is an international holiday. The price of international travel increased by 10.9% in the last three months alone. me
Also, the airlines are in total disarray right now, understaffed, not enough seats, and so you’re paying through the nose for the worst flight of your life. Someone I know got stuck in the Middle East after a certain airline canceled their flight. This happens, but then they refused to give you a refund! It’s a terrible time to try to use your passport.
What is getting cheaper, however, are shoes, as the chart below shows. This has been happening for a long time. When I was a kid, you could pay $100 for a pair of Nike sneakers, and you still can. The shoes are apparently immune to inflation (the reason being that they are increasingly made of synthetic fabrics, not leather, and often made in Bangladesh).
We can’t live on shoes alone, unfortunately. The cost of living is a huge burden on Australians and will only get worse, the Treasurer announced in this week’s Budget.
Electricity prices will rise by 56 percent in the next two years and flooding will make going to the supermarket even more painful. At the same time, he removed the low- and middle-income tax offset that gave people $1,080 back on their taxes if they earned between $48,000 and $90,000 in income.
And, of course, mortgage rates are rising ever higher, squeezing the budgets of anyone who owes money to the bank.
Are you a spender or a saver?
When prices rise, some Australians will spend more to keep buying the same things, maintaining their lifestyle even if it costs a little more. They will stop saving as much to cover the cost, or even reduce their savings. Others will be like me, turning off the heating. Faced with higher prices, we drive a little less, eat cheaper food, shop a little more and buy in bulk, trying not to get hit by the full impact of inflation.
Jason Murphy is an economist | @jasemurphy. He is the author of the book Incentivology.