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Cost of living rises: Growing divide between ‘haves and have-nots’

Aussies are increasing their savings but the cost-of-living crisis is getting worse.

A composite image of Australian currency and people lined up at a grocery story to demonstrate the rising cost of living.
The cost of living grew again in the June quarter, but it was the smallest rise in September 2021. (Source: AAP / Getty)

The cost of living grew again in the June quarter - rising 0.8 per cent and 6 per cent annually - but was the lowest rise since September 2021, according to the Australian Bureau of Statistics (ABS).

"While prices continued to rise for most goods and services, there were some offsetting price falls this quarter, including for domestic holiday travel and accommodation and automotive fuel,” ABS head of prices statistics Michelle Marquardt said.

What’s costing the most?

The most significant contributors to the rise in the June quarter were rents (up 2.5 per cent), international holiday travel and accommodation (up 6.2 per cent), other financial services (up 2.5 per cent) and new homes purchased by owner occupiers (up 1 per cent).

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"Rents recorded the strongest quarterly rise since 1988, reflecting low vacancy rates amid a tight rental market. Rental price growth for flats continued to outpace the growth for houses,” Marquardt said.

"Higher demand for international travel, particularly to Europe with the start of the European summer peak season, led to price increases.”

Food prices also rose this quarter (up 1.6 per cent), adding to the increases of 1.6 per cent and 0.9 per cent in the March 2023 and December 2022 quarters.

The rise was driven by meals out and takeaway foods (up 1.7 per cent), fruit and vegetables (up 2.4 per cent) and bread and cereal products (up 2.9 per cent).

"A shortage of potatoes due to wet weather in key growing regions late last year has continued to place pressure on prices for potato products, including takeaway hot chips, potato crisps and frozen potato products. Vegetable prices rose due to some salad vegetables, like tomatoes and lettuces, coming out of season,” Marquardt said.

The divide is growing

In July, the average Aussie reported saving $730 per month, according to Finder’s Consumer Sentiment Tracker. That’s compared to $598 in June.

And, while Aussies are saving more, it’s only those who have been able to put extra cash away. Others have been relying more heavily on buy now, pay later (BNPL) services, indicating some are having to borrow money to spend.

“While Aussies are, on average, saving more money and feeling slightly more positive towards housing affordability, we’re still facing significant economic headwinds,” Finder personal finance expert Tim Bennet said.

“There’s a lot of factors exerting downwards pressure on households recently and sentiment is expected to keep falling.

“The figures also point to a widening gap between the haves and the have-nots – some are able to put away extra cash, while others are becoming increasingly reliant on BNPL platforms.”

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