Cost-of-living pressures are hitting Australians hard, but some groups are struggling more than others. New data from the Australian Bureau of Statistics (ABS) has shed light on just how uneven these increases are, revealing that those on government payments are facing the brunt of the hike. So, while everyone’s feeling the pinch, some are getting squeezed a lot tighter.
Living Costs Rising: Who’s Feeling the Most Pressure?
In 2025, the ABS recorded annual cost increases ranging from 2.3% to 4.2%, depending on your household situation. The highest cost increases were seen by those who are relying on government payments, with costs climbing by at least 4%. A big chunk of this rise comes from higher energy bills, a sector that’s been particularly tough for those on welfare, pensions, and other government assistance.
Meanwhile, employee households saw the smallest increase at just 2.3%. Why? Well, largely thanks to the falling mortgage interest charges, after the Reserve Bank of Australia (RBA) made multiple rate cuts last year.
What’s Driving the Pain for Government Payment Households?
Now, let’s talk about the tough spot that government-payment households are in. The rise in electricity prices has hit these households the hardest, with many pensioners and welfare recipients feeling the squeeze the most. In fact, for these groups, the price of basic energy and even everyday goods has increased substantially, making it harder to make ends meet.
Interestingly, Ben Phillips, an economic researcher at Australian National University, pointed out to ABC News that employee households haven’t been hit as hard. He explained that the cost of living for those relying on wages and salaries has remained more manageable, with wages helping to offset the rise in costs. But for those on fixed incomes, it’s been a much tougher ride.
The Impact of Recent Interest Rate Changes
As if things weren’t complicated enough, interest rate hikes are making life even more difficult for those with mortgages. The RBA raised rates again in early February, pushing the cash rate to 3.85%. Phillips acknowledged that while the impact may not be huge in the short term, higher rates could push living costs up in the future. If inflation keeps rising, mortgage holders could face more challenges, especially if the cost of borrowing continues to increase.
But it’s not all bad news. For some households, healthcare costs have gone down slightly. More people are reaching the Pharmaceutical Benefits Scheme safety net threshold, which means they’ll pay less for medications. So while energy bills are soaring, at least some out-of-pocket expenses are being kept in check.
What’s Next?
Looking ahead, the data paints a mixed picture. Employee households seem to have been relatively insulated from the worst of the cost-of-living increases, but government-payment households are bearing the brunt. If inflation continues to creep up, we could see more interest rate hikes, putting pressure on mortgage holders and renters. Meanwhile, those who rely on welfare may continue to struggle with rising costs in basic goods and energy.
The good news? There’s a chance for relief if the government can do more to address the challenges faced by those on lower incomes. However, with energy prices remaining high and inflation pressures sticking around, it seems the fight against the rising cost of living is far from over.
