Inflation: The Silent Thief

Inflation is the rate at which prices for goods and services are rising over time. It is a major economic indicator, and it can have a significant impact on people's finances.


Australia's inflation rate is at its highest level in over 30 years, with the Consumer Price Index (CPI) rising by 6.0% in the year to June 2023. This is the highest inflation rate since the early 1990s.


Consumer Price Index graph, year over year

The graph above shows that the CPI has been rising steadily in recent months, reaching a 30-year high of 6.0% in the year to June 2023. This means that prices for goods and services have increased by 6.0% on average over the past year.


There are a number of factors contributing to the high inflation rate in Australia, including:

  • Supply chain disruptions: The COVID-19 pandemic has caused significant disruptions to global supply chains. This has led to higher prices for goods and services.
  • The war in Ukraine: The war in Ukraine has also contributed to higher inflation. Russia is a major exporter of energy and commodities, and the war has disrupted supplies and pushed up prices.
  • Strong domestic demand: The Australian economy is currently experiencing strong domestic demand. This is putting upward pressure on prices.


What are the implications of high inflation for Australian households?


The high inflation rate in Australia is putting pressure on Australian households. The cost of living is rising, and real wages are falling. This is making it difficult for Australian households to make ends meet.


There are a number of things that Australian households can do to cope with high inflation. These include:

  • Budgeting: It is important to have a budget in place to track your spending and income. This will help you to identify areas where you can cut back on spending.
  • Saving: It is important to save money in case of unexpected expenses. Aim to save at least 3-6 months of living expenses.
  • Investing: Investing can be a good way to grow your money over the long term. However, it is important to do your research and understand the risks involved before investing. Working with a qualified share advisor like Sharewise can ensure you achieve your investment objectives and give you peace of mind knowing an expert is overlooking your portfolio for you.


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Disclaimer: This article does not constitute financial advice nor a recommendation to invest in the securities listed. The information presented is intended to be of a factual nature only. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking financial, legal and taxation advice before investing.

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