High Inflation Rate Taking Toll On Australians' Everyday Spending

Despite the Australian government's efforts, the central bank's warning of more hikes ahead and the high inflation mean many Australians have to continue to grapple with the rising cost of living.

To alleviate the escalating cost of living, the Australian government has committed to providing 14.6 billion Australian dollars (9.85 billion dollars) in cost-of-living relief through the federal budget. ( Image Source :Getty )

As the Reserve Bank of Australia (RBA) continued to increase interest rate to curb inflation, the frequent interest rate hikes are placing additional strain on the cost of living, leaving many Australians struggling financially and compelled to make significant adjustments to their budgets and lifestyles.

Last week, the RBA decided to increase the cash rate target by 25 basis points to 4.10 percent, which marked the fourth rate hike so far this year and also the 12th jump since May last year.

Shankar Sthipam, a 60-year-old project manager from Brisbane, Queensland, is among those affected. Supporting his stay-at-home wife, with their daughter living in the United States, Sthipam has been compelled to adopt a more frugal lifestyle due to mortgage payments and increasing expenses.

Even simple foodstuff like cornflakes has also gone up. A small pack of cornflakes used to be 4.50 Australian dollars (3.04 U.S. dollars), but now it's standing at seven Australian dollars (4.72 dollars) per packet, "and I am just so appalled by the price when the product is not imported but made right here in Australia itself," he told Xinhua.

He has substantially reduced the frequency of dining out and now prefers cooking at home and packing his lunch to save money.

Sthipam has also witnessed the detrimental impact of the rising cost of living on small businesses, with many local mom-and-pop shops unable to sustain themselves and closing down.

"If mom-and-pop sundry shops were allowed to thrive, then at least we could go to them and get some of our groceries at a lower price," he said.

Sharmila Nadarajah, a 40-year-old mother of two and an enterprise resource planning (ERP) system specialist living in Perth, Western Australia, shares a similar experience.

As her family struggles to meet their basic needs, including caring for their pet dog, their monthly expenses have doubled. The surge in mortgage interest rates has added further strain to their finances, making it increasingly challenging to make ends meet.

To cope with the mounting financial pressures, Nadarajah's family has made sacrifices such as reducing their dining out frequency and actively seeking ways to save money. Nadarajah has started a side hustle by running a beauty salon from her home in Butler.

"Most of our extended families live abroad, and there were a couple of birthdays we had to celebrate. So, we had to tighten our belts even further to afford these trips abroad and be with family during their special moments, especially after not being able to see them for at least four years in a row due to COVID-19," she said.

To alleviate the escalating cost of living, the Australian government has committed to providing 14.6 billion Australian dollars (9.85 billion dollars) in cost-of-living relief through the federal budget.

The government assured the public that this funding will not contribute to inflation, as its primary objective is to directly alleviate price pressures and reduce inflation rates that have remained near 30-year highs at 7 percent.

Despite the government's efforts, the central bank's warning of more hikes ahead and the high inflation mean many Australians have to continue to grapple with the rising cost of living.

A research report from the commercial bank ANZ showed that the peak in the cash rate for this cycle is expected to increase by another quarter-point to 4.35 percent by August.

"Mortgage repayments are increasing due to successive interest rate rises. Day-to-day expenses like groceries, transportation, and insurance have also gone up," said Bhavani Subramaniam, a 45-year-old Sydney-based accountant and mother of one.

"I've reduced my daily coffee from cafes to once or twice a week. I've changed my shopping habits to prioritize bargains and sales, and I plan meals for the week to avoid wastage of groceries," Subramaniam added. 

(Apart from the headline, no editing has been done in the report by ABP Live.)