The data shows that the cost of living is improving in Australia, but are we out of the woods yet? One group certainly isn't.
It is relatively easy to identify the beginning of the cost of living crisis. The starting gun was fired with the rise of inflation and the resulting cash rate hikes in early 2022.
While some Australians were already struggling before this point, the idea that the nation was in a cost of living crisis gained real traction from early 2022, as Google Trends data reflects.
The popularity of "cost of living" as a search term
The popularity of "cost of living" as a search term
Week
cost of living: (Australia)
9/08/2020
7
16/08/2020
7
23/08/2020
7
30/08/2020
7
6/09/2020
8
13/09/2020
7
20/09/2020
6
27/09/2020
6
4/10/2020
5
11/10/2020
7
18/10/2020
5
25/10/2020
6
1/11/2020
5
8/11/2020
6
15/11/2020
5
22/11/2020
5
29/11/2020
4
6/12/2020
5
13/12/2020
5
20/12/2020
3
27/12/2020
5
3/01/2021
5
10/01/2021
6
17/01/2021
4
24/01/2021
6
31/01/2021
6
7/02/2021
6
14/02/2021
6
21/02/2021
7
28/02/2021
7
7/03/2021
5
14/03/2021
5
21/03/2021
5
28/03/2021
6
4/04/2021
5
11/04/2021
6
18/04/2021
5
25/04/2021
7
2/05/2021
5
9/05/2021
5
16/05/2021
6
23/05/2021
6
30/05/2021
6
6/06/2021
6
13/06/2021
8
20/06/2021
7
27/06/2021
6
4/07/2021
6
11/07/2021
6
18/07/2021
6
25/07/2021
6
1/08/2021
5
8/08/2021
6
15/08/2021
7
22/08/2021
7
29/08/2021
8
5/09/2021
6
12/09/2021
7
19/09/2021
6
26/09/2021
6
3/10/2021
7
10/10/2021
6
17/10/2021
7
24/10/2021
6
31/10/2021
7
7/11/2021
5
14/11/2021
6
21/11/2021
6
28/11/2021
6
5/12/2021
6
12/12/2021
5
19/12/2021
4
26/12/2021
5
2/01/2022
6
9/01/2022
6
16/01/2022
7
23/01/2022
9
30/01/2022
9
6/02/2022
10
13/02/2022
10
20/02/2022
11
27/02/2022
9
6/03/2022
11
13/03/2022
17
20/03/2022
19
27/03/2022
26
3/04/2022
18
10/04/2022
15
17/04/2022
20
24/04/2022
100
1/05/2022
29
8/05/2022
20
15/05/2022
17
22/05/2022
21
29/05/2022
23
5/06/2022
23
12/06/2022
21
19/06/2022
18
26/06/2022
26
3/07/2022
26
10/07/2022
19
17/07/2022
20
24/07/2022
24
31/07/2022
24
7/08/2022
21
14/08/2022
21
21/08/2022
21
28/08/2022
30
4/09/2022
21
11/09/2022
17
18/09/2022
14
25/09/2022
15
2/10/2022
16
9/10/2022
16
16/10/2022
16
23/10/2022
18
30/10/2022
17
6/11/2022
17
13/11/2022
15
20/11/2022
16
27/11/2022
14
4/12/2022
14
11/12/2022
11
18/12/2022
12
25/12/2022
11
1/01/2023
11
8/01/2023
14
15/01/2023
16
22/01/2023
11
29/01/2023
18
5/02/2023
18
12/02/2023
16
19/02/2023
18
26/02/2023
16
5/03/2023
20
12/03/2023
21
19/03/2023
19
26/03/2023
18
2/04/2023
22
9/04/2023
16
16/04/2023
18
23/04/2023
19
30/04/2023
21
7/05/2023
29
14/05/2023
21
21/05/2023
22
28/05/2023
19
4/06/2023
24
11/06/2023
23
18/06/2023
21
25/06/2023
24
2/07/2023
22
9/07/2023
26
16/07/2023
21
23/07/2023
23
30/07/2023
28
6/08/2023
22
13/08/2023
23
20/08/2023
30
27/08/2023
24
3/09/2023
23
10/09/2023
20
17/09/2023
17
24/09/2023
17
1/10/2023
18
8/10/2023
20
15/10/2023
21
22/10/2023
20
29/10/2023
20
5/11/2023
17
12/11/2023
18
19/11/2023
22
26/11/2023
20
3/12/2023
20
10/12/2023
18
17/12/2023
16
24/12/2023
12
31/12/2023
22
7/01/2024
16
14/01/2024
20
21/01/2024
25
28/01/2024
18
4/02/2024
19
11/02/2024
17
18/02/2024
18
25/02/2024
20
3/03/2024
21
10/03/2024
22
17/03/2024
25
24/03/2024
20
31/03/2024
21
7/04/2024
19
14/04/2024
22
21/04/2024
32
28/04/2024
25
5/05/2024
25
12/05/2024
28
19/05/2024
25
26/05/2024
26
2/06/2024
32
9/06/2024
34
16/06/2024
40
23/06/2024
34
30/06/2024
32
7/07/2024
27
14/07/2024
21
21/07/2024
25
28/07/2024
28
4/08/2024
27
11/08/2024
32
18/08/2024
26
25/08/2024
33
1/09/2024
25
8/09/2024
22
15/09/2024
23
22/09/2024
17
29/09/2024
17
6/10/2024
19
13/10/2024
19
20/10/2024
25
27/10/2024
20
3/11/2024
17
10/11/2024
34
17/11/2024
23
24/11/2024
16
1/12/2024
16
8/12/2024
14
15/12/2024
15
22/12/2024
11
29/12/2024
14
5/01/2025
16
12/01/2025
14
19/01/2025
23
26/01/2025
17
2/02/2025
19
9/02/2025
17
16/02/2025
22
23/02/2025
21
2/03/2025
22
9/03/2025
25
16/03/2025
28
23/03/2025
24
30/03/2025
25
6/04/2025
26
13/04/2025
20
20/04/2025
21
27/04/2025
23
4/05/2025
28
11/05/2025
20
18/05/2025
20
25/05/2025
39
1/06/2025
22
8/06/2025
18
15/06/2025
16
22/06/2025
17
29/06/2025
15
6/07/2025
16
13/07/2025
18
20/07/2025
16
27/07/2025
16
3/08/2025
15
10/08/2025
18
Much has shifted in the three years since. Price rises have fallen back to 2019 levels, which has allowed the RBA to deliver three 3 rate cuts over the last 5 meetings. These cuts save the average mortgage holder an estimated $3,806 annually.
So, is the crisis over?
Defining a cost of living crisis
To answer this question, I thought it would be prudent to define what a cost of living crisis is:
"A cost of living crisis occurs when the price of essential goods and services (like groceries and rents) rises faster than average earnings, leading to a decline in living standards."
It's clear from this definition that to identify if the cost of living is over, we need to consider two key questions:
1. Are wages rising in line with or faster than prices? 2. If so, have Australians' living standards improved as a result?
Wages vs prices
The Australian Bureau of Statistics (ABS) publishes quarterly data on both wages and consumer prices. At first glance, wages have been growing faster than inflation since 2024.
Annual change in the price of goods and services compared to wages
Annual change in the price of goods and services compared to wages
Date
Wages*
Prices^
Jun-10
3
3.1
Sep-10
3.6
2.9
Dec-10
3.9
2.8
Mar-11
3.9
3.3
Jun-11
3.8
3.5
Sep-11
3.6
3.4
Dec-11
3.6
3
Mar-12
3.6
1.6
Jun-12
3.8
1.2
Sep-12
3.8
2
Dec-12
3.4
2.2
Mar-13
3.1
2.5
Jun-13
2.8
2.4
Sep-13
2.6
2.2
Dec-13
2.6
2.7
Mar-14
2.7
2.9
Jun-14
2.6
3
Sep-14
2.6
2.3
Dec-14
2.5
1.7
Mar-15
2.3
1.3
Jun-15
2.3
1.5
Sep-15
2.3
1.5
Dec-15
2.2
1.7
Mar-16
2.1
1.3
Jun-16
2.1
1
Sep-16
1.9
1.3
Dec-16
1.9
1.5
Mar-17
1.9
2.1
Jun-17
1.9
1.9
Sep-17
2
1.8
Dec-17
2.1
1.9
Mar-18
2
1.9
Jun-18
2.1
2.1
Sep-18
2.3
1.9
Dec-18
2.3
1.8
Mar-19
2.3
1.3
Jun-19
2.3
1.6
Sep-19
2.2
1.7
Dec-19
2.2
1.8
Mar-20
2.2
2.2
Jun-20
1.8
-0.3
Sep-20
1.4
0.7
Dec-20
1.3
0.9
Mar-21
1.5
1.1
Jun-21
1.8
3.8
Sep-21
2.2
3
Dec-21
2.4
3.5
Mar-22
2.4
5.1
Jun-22
2.6
6.1
Sep-22
3.2
7.3
Dec-22
3.4
7.8
Mar-23
3.7
7
Jun-23
3.7
6
Sep-23
4
5.4
Dec-23
4.2
4.1
Mar-24
4
3.6
Jun-24
4.1
3.8
Sep-24
3.5
2.8
Dec-24
3.2
2.4
Mar-25
3.4
2.4
Jun-25
3.4
2.1
Great, we've made it out of the woods! It's not quite as simple as that though.
The consumer price index (CPI), which we are using as our measure of prices in the above graph, includes a wide range of items but we only want to focus on essential goods and services. The CPI also doesn't include one of the most essential expenses that over a third of Australians pay each month: mortgage repayments.
When we isolate essential costs and include housing repayments, a more complex picture emerges.
Annual change in prices of essential goods and services compared to wages
Annual change in prices of essential goods and services compared to wages
Period
June 2024 - June 2025
Consumer Price Index (CPI)
2.10
Food and non-alcoholic beverages
2.99
Housing prices
3.40
Wages (WPI)
3.40
Rents
4.49
Mortgage interest costs
4.50
Grocery prices have begun rising more slowly than wages, and electricity costs (which aren't graphed here for neatness) have actually fallen due to government subsidies.
However, rents and mortgage repayments continue to outgrow wages. Data from Cotality (formerly CoreLogic) also reveals that house prices have kept pace with wages, meaning affordability hasn't improved in real terms either.
For the millions of Australians who rent or are still paying off a home, the pressure hasn't eased in many areas.
Are living standards improving?
We could look at real discretionary incomes as a measure of living standards, but subjective data can also be revealing.
Our nationally representative Consumer Sentiment Tracker provides insight into how Australians feel about their financial well-being. While subjective surveys have their flaws, we carefully design questions, screen respondents and clean the data to ensure it's robust.
The first interesting trend that emerges is the different proportion of renters and mortgage holders who are struggling to pay their respective housing costs.
Mortgage stress vs rental stress
Mortgage stress vs rental stress
Month - For Trends
Q5.4 - Do you struggle to pay your home loan?
Q5.4 - Do you struggle to pay your rent?
May 2019
25
30
Jun 2019
22
32
Jul 2019
22
32
Aug 2019
20
33
Sep 2019
20
33
Oct 2019
20
32
Nov 2019
21
33
Dec 2019
22
33
Jan 2020
21
34
Feb 2020
20
32
Mar 2020
20
32
Apr 2020
22
33
May 2020
21
35
Jun 2020
23
33
Jul 2020
22
30
Aug 2020
23
26
Sep 2020
21
25
Oct 2020
21
26
Nov 2020
20
28
Dec 2020
21
29
Jan 2021
22
29
Feb 2021
25
27
Mar 2021
25
28
Apr 2021
27
29
May 2021
30
31
Jun 2021
29
33
Jul 2021
26
33
Aug 2021
22
32
Sep 2021
23
33
Oct 2021
22
33
Nov 2021
24
36
Dec 2021
22
36
Jan 2022
24
38
Feb 2022
25
37
Mar 2022
28
38
Apr 2022
30
41
May 2022
27
41
Jun 2022
26
40
Jul 2022
25
39
Aug 2022
26
41
Sep 2022
27
39
Oct 2022
29
39
Nov 2022
32
38
Dec 2022
33
42
Jan 2023
34
42
Feb 2023
35
44
Mar 2023
36
43
Apr 2023
36
44
May 2023
37
46
Jun 2023
39
49
Jul 2023
40
50
Aug 2023
40
50
Sep 2023
38
48
Oct 2023
37
46
Nov 2023
36
44
Dec 2023
37
44
Jan 2024
37
45
Feb 2024
37
45
Mar 2024
37
44
Apr 2024
37
43
May 2024
37
45
Jun 2024
35
47
Jul 2024
37
49
Aug 2024
39
48
Sep 2024
41
47
Oct 2024
41
46
Nov 2024
40
46
Dec 2024
34
46
Jan 2025
36
45
Feb 2025
36
45
Mar 2025
37
45
Apr 2025
36
46
May 2025
37
46
Jun 2025
34
46
Jul 2025
33
46
Housing stress has historically been higher for renters. While mortgage stress levels have decreased from a peak of 41% in October 2024 to 31% currently, rental stress has remained high, especially over the last 6 months.
Mortgage holders feel the benefit of rate cuts immediately via lower repayments. But landlords, of course, don't pass those savings on to tenants. As a result, renters aren't seeing any real relief from falling interest rates.
This contrast is clear when we compare the average amount each group saves per month.
Average monthly savings by housing tenure
Average monthly savings by housing tenure
Month
Paying mortgage
Own outright
Renting
Apr 2020
721
1018
462
May 2020
731
1108
489
Jun 2020
769
1009
510
Jul 2020
776
979
541
Aug 2020
827
890
561
Sep 2020
833
879
558
Oct 2020
941
925
535
Nov 2020
935
990
495
Dec 2020
941
1139
505
Jan 2021
872
1176
592
Feb 2021
882
1240
651
Mar 2021
896
1278
638
Apr 2021
898
1281
565
May 2021
895
1280
514
Jun 2021
894
1121
493
Jul 2021
898
1029
506
Aug 2021
979
835
534
Sep 2021
965
845
516
Oct 2021
1004
822
509
Nov 2021
908
873
463
Dec 2021
967
875
465
Jan 2022
900
863
423
Feb 2022
800
729
410
Mar 2022
630
607
394
Apr 2022
574
551
367
May 2022
670
653
403
Jun 2022
745
848
403
Jul 2022
810
993
399
Aug 2022
864
1103
394
Sep 2022
867
991
442
Oct 2022
823
917
478
Nov 2022
706
836
460
Dec 2022
636
871
412
Jan 2023
700
906
416
Feb 2023
726
907
419
Mar 2023
756
856
455
Apr 2023
676
826
429
May 2023
677
846
417
Jun 2023
671
872
389
Jul 2023
746
900
401
Aug 2023
779
898
417
Sep 2023
846
932
416
Oct 2023
802
905
450
Nov 2023
756
936
451
Dec 2023
747
906
456
Jan 2024
780
935
403
Feb 2024
814
872
448
Mar 2024
851
906
470
Apr 2024
863
873
521
May 2024
867
920
474
Jun 2024
825
859
484
Jul 2024
797
848
472
Aug 2024
843
837
511
Sep 2024
866
930
493
Oct 2024
877
1043
439
Nov 2024
913
1087
357
Dec 2024
951
1129
358
Jan 2025
979
1157
420
Feb 2025
927
1120
495
Mar 2025
907
1209
492
Apr 2025
910
1168
495
May 2025
914
1261
459
Jun 2025
1075
1265
477
Jul 2025
1106
1349
477
Aug 2025
1172
1406
482
The average mortgage holder saved an additional $258 in August when compared to just three months earlier in May.
Are we there yet?
Many of the traditional indicators we use to measure the cost of living are improving, but there is nuance hidden behind the average figures. Two-thirds of Australian households rent the roof over their heads, and almost half of them (45%) say they struggle to do so. The recent cuts to the cash rate are having a noticeable impact on mortgage holders but are yet to be felt by renters who are still saving roughly $400 on average.
The difference between renters and homeowners is just one example of the nuance in our economy. While we may not all be clear yet, it does look like greener pastures are close. The RBA has managed to bring inflation down within their target range of 2-3% without causing a significant jump unemployment. It may take some more time to be fully felt, and certain groups will notice a bigger shift, but it seems we are slowly turning a corner.
Sources
Finder's Insights Column examines issues affecting the Australian consumer. It appears weekly on finder.com.au.
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