The cost of living for working families in Australia has increased sharply, reaching the steepest level in more than two decades, driven mostly by higher mortgage costs. Charities have warned that increasing numbers of households are reaching a crisis point with everyday expenses. In December, inflation reached 7.8 per cent, with employee households being the hardest hit, rising by 9.3%. These figures are the largest increase for employee households since the Australian Bureau of Statistics (ABS) began tracking this data in 1999.
Prime Minister Anthony Albanese said the government knows households are under substantial cost of living pressure, saying ‘Inflation is a global challenge’.
“It is something the whole world is grappling with, and it is something that the government is very conscious of, and we will be conscious of in the lead-up to the budget,” Albanese said.
The inflation rate in Australia is accelerating, rather than “peaking”, on top of staggering price rises over the past year for food, petrol, and other essentials, hitting working-class households the hardest. According to the Consumer Price Index (CPI), the inflation rate jumped to a 33-year annual high of 7.8% in the December quarter of 2022, up from 7.3% in the September quarter. The “non-discretionary” spending index rose even more sharply, by 8.4 per cent.
Working-class households are experiencing enormous hardship and the greatest cut to living standards since World War II, as the Reserve Bank of Australia (RBA) and the Labor government, assisted by the trade union bureaucrats, insist that real wages must continue to fall. As is happening worldwide, the price surge is led by the most basic living needs.
Dairy and related products were up 4% during the last quarter of 2022 and an appalling 14.9% over the year. Bread and cereal product prices climbed by 3.4% in the three months, up more than 12.2 per cent in the year. Fruit and vegetables fell by 7.3% in the December quarter but were still up by 8.5% over the year.
Non-durable items, such as household consumables like toiletries and detergents, climbed at 2.3% during the last quarter of the year and at an annual pace of 12%. Fuel prices increased by a little over 2 per cent in the three months to December but were 13.2% higher than at the end of 2021. Housing costs rose by 10.7% over the year, which included rents that lifted by 4%, the highest rise since 2012. Economists predicted rental inflation would continue to climb.
The acceleration in the cost-of-living crisis was further revealed in the monthly CPI indicator for December, which rose 8.4% in the 12 months to December, following annual rises of 7.3% in November and 6.9% in October. While many media focused on a 13% jump in holiday travel and accommodation in the December quarter to distract attention from the impact on food and energy, electricity prices also rose sharply, up 8.6% in those three months alone.
Despite token price caps on wholesale electricity and gas introduced by the Labor government in December, much bigger energy price hikes will occur in 2023. While yet again showing sympathy for ‘Australians doing it tough’, Treasurer Jim Chalmers insisted that the promised bill rebates for small businesses and low-income households would not start until later in the year. He peddled the illusion that inflation may have peaked.
However, inflation has been outstripping workers’ wages at a record rate for more than a year, with union officials policing the biggest cuts to real wages. In the September quarter of 2022, union-negotiated enterprise agreements delivered average nominal annual wage rises of just 2.6%, compared with 3.1% in non-union deals, according to the most recent data available from the Department of Workplace Relations.
The government has acknowledged the cost-of-living pressure on households while noting that Australians have experienced their largest real wage decline on record.
Obviously, the rise in inflation is due to profit-gouging by conglomerates and the US-led drive to war, causing an inflationary spiral. Therefore, the root cause of inflation lies in the capitalist profit system, and not in wages.