Official inflation rate is out and… you’re going to need a bigger pay rise
We take back what we said about needing a 4.25% raise. The official inflation rate for this year so far is even higher.
Last week, we published a story on the pay rise you need this year to keep up with inflation. This was based on the government's prediction that inflation will reach a high of 4.25% by the middle of the year.
However, the official inflation rate for the year so far has just been announced and it's actually much higher than predicted at 5.1%. And chances are it'll be even higher next quarter.
This is a shockingly high inflation rate, with the RBA aiming to keep inflation at around the 2% mark. Inflation hasn't jumped this quickly in more than 2 decades. The increased costs of everyday items such as groceries and petrol prices have largely driven the high inflation rate.
So if you read our previous article on the amount you'll need as a pay rise this year, well, now you'll need even more. Here's the pay rise you'll now need this year to keep up with the current inflation rate of 5.1%.
|Your current salary||Pay rise needed with 5.1% inflation|
Because the cost of living is increasing at such a fast rate, if your income doesn't increase too you're actually getting a pay cut. This is why the Barefoot Investor Scott Pape says inflation is the biggest financial risk this year.
And remember, this is just what you need to keep up with inflation. If you want to get a pay rise and beat inflation by increasing your buying power, you'll need even more than this.
What if you can't get a pay rise?
If you can't get a pay rise this year, there are other ways you can prepare your money for inflation. Here are a few things you can start to do right now.
- Look at your spending and see where you can cut back (here are 50 money-saving tips to get you started).
- Use a fuel price app (plus these other 5 ways to beat petrol prices).
- Increase your income with a side hustle or pick up extra shifts at work.
- Think about what you can rent out for extra cash – do you have a spare room, a garage space, a car or caravan?
- Refinance your home loan to reduce your interest rate ahead of upcoming rate rises.