As Australia’s cost of living continues to soar, it is becoming increasingly difficult to afford the basics.
Combined with rising rents, millions of people are now living below the poverty line in Australia.
The Organisation for Economic Cooperation and Development (OECD) defines the poverty line as half the median household income of the total population.
A report by the Poverty and Inequality Organisation found there were 3.34 million people living below the poverty line. That’s more than one in eight adults and one in six children.
In dollar figures, this translates to $426.30 a week for a single adult living alone and $895.22 for a couple with two children.
New research from Savvy found the average disposable household income was $1,124 per week.
“One in four Australians is struggling to stay afloat, despite the promising rise in disposable and discretionary income,” the Savvy report said.
“The cause is rising interest rates and inflation, which are having a significant impact on day-to-day budgets.”
The report also pointed to higher petrol and food prices, which it said were the main strain on families.
“With 75 per cent of households in debt in 2019-20, it proves finances remain an issue for many people,” the report said.
“That equals three in four households, which is more than 7,000 homes across the country.”
Impact of inflation
The inflation rate hit 5.1 per cent in the March quarter and is estimated to reach 7 per cent by the end of the year.
“An inflation rate of 5.1 per cent means, on average, you need $105.10 today to buy what $100 bought a year ago,” the Savvy report said.
The biggest offenders breaking the bank were groceries, rent, coffee, petrol and international travel.
Rent and mortgage-repayment costs were the largest expense.
“On average, it costs Australian households $444 per week for housing,” Savvy said.
“Food and groceries are the second-highest expense, costing an average of $210 per week, followed by recreation and culture ($208).”