With the cost of living increasing, meeting the basic requirements for food and shelter is becoming challenging for more people than ever. The cost of food is rising, energy bills are being met with shock, and petrol prices are causing endless frustration. If you’re a little unsure about how this came about or keep seeing the word inflation everywhere but have no idea what it means, then read on. We've provided some easy to digest info and ways you can help to ease some of those financial pressures.
What is inflation?
Inflation is the increase in prices over a certain period of time on goods and services, usually measured on a quarterly or annual basis. Prices mainly increase over time, but they can also decrease, causing deflation. The most well recognised calculator of inflation is the Consumer Price Index (CPI), which measures household inflation.
Why is this happening and what does it mean?
There are numerous reasons why inflation rates are rising, including the COVID-19 pandemic, supply chain issues, the effects of climate change on crop production and the war in Ukraine. These all can contribute to food and petrol shortages with prices rising to compensate. The Reserve Bank of Australia has also lifted its interest rates for mortgages and loans in response to the increasing inflation rate.
According to the Australian Bureau of Statistics, the CPI rose 2.1% this quarter, while over the twelve months to March 2022, the CPI rose 5.1%. The most significant price rises were new dwelling purchases by owner-occupiers (+5.7%) and automotive fuel (+11.0%).
According to Philip Lowe, governor of the Reserve Bank of Australia, “Inflation is expected to increase further but then decline back towards the 2-3 per cent range next year. Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago.”
How does this impact you?
Well, you’ve no doubt become aware of the rising prices already, with petrol and food prices causing distress. Rising inflation increases the cost of living and it will be more difficult to afford the items you usually buy. With prices having gone up for everyday essentials, shoppers may have to rely on specials and deals to help with the increase. Interest rates also tend to rise in the same direction as inflation, causing pain for home buyers and their mortgage repayments.
What can I do?
To help relieve some of the financial stress, we’ve listed some ways you can make your hard earned money reach further:
Make a budget
Set up a budget for yourself to help ease the pressure, review your spending habits and see where you can adjust. Whether that’s by reducing costs on groceries by meal planning or skipping that daily cappuccino at a cafe, everything counts. If you have a hefty phone plan, see if you can reduce the amount you pay by changing to a cheaper plan if possible. Some banking apps allow you to set budgets for different types of spending such as travel, accommodation, entertainment and shopping - take advantage of this kind of thing as it can take the stress out of constantly asking yourself 'where does all my money go?'.
Shop around for the best deals
Look around for any special sales or deals that you can take advantage of, especially when it comes to your home loan, electricity account and insurance. You can also find ways to cut down on your expenditure, by canceling unnecessary subscriptions you don’t use or reducing your Uber Eats orders. Shop at your local markets, where you’ll not only get to experience fresh produce and low prices, but you’ll also be helping out local businesses in these difficult times.
Save on petrol
Reducing the amount of petrol you use can make a difference to your finances. If it’s possible, take public transport when you can and carpool with others. Try to plan your errands so you can complete several tasks in one trip, instead of having to make several trips in your car. Shop around for the lowest petrol prices as well, by using apps like Petrol Spy Australia or Fuel Map Australia. Make sure your notifications for the Sonder app are always turned on too, as we send out safety notices and traffic delay notifications so you can avoid having to waste petrol by knowing which places to avoid and which shortcuts to take.
You can find more information on financial stress and resources to help here. Good Shepherd and MoneySmart also offer a range of advice and services. You can also chat to one of our Sonder team members who can provide support.
If you feel overwhelmed by debt, contact a financial counsellor as soon as possible. If you get help early, you will have many more options.
National Debt Helpline — 1800 007 007
The free National Debt Helpline is open from 9.30am to 4.30pm, Monday to Friday.
If you have any questions or need extra support, we're here to help you anytime in any language. Simply start a chat with us via the home screen of the Sonder app to connect to our team of qualified, caring health professionals.
Image credit: The Simpsons
All content is created and published for informational purposes only. It is not intended to be a substitute for professional advice. Always seek the guidance of a qualified health professional.