Interest Rates Cut – But Is the Cost of Living Really Falling?
This week, the Reserve Bank announced a 0.25% cut to interest rates, with inflation reportedly dropping to 2.1%.
Good news for borrowers – but is the real-world cost of living actually improving?
The Disconnect Between Data and Reality
Official inflation figures suggest prices are stabilising, but for many Australians, the weekly grocery bill, utility payments, and everyday expenses tell a different story.
Just this morning, one national breakfast show reported grocery costs have risen by 11% in the past year. And that’s before factoring in shrinkflation – paying the same price for a smaller product.
Everyday Price Rises
Here are just a few recent increases households have been hit with:
Telstra – plan costs up 7.7%
Postage – stamps up 13.3%
Package freight – sending and receiving parcels up ~20%
Coffee – projected to rise 10%
Insurance – up 18% over the last two years (14% last year, 4% this year)
Why the Lag?
Interest rate changes and inflation data often take time to filter through the economy. While lower rates can relieve some financial pressure, it could be months before households feel the benefit in their everyday expenses.
The bottom line: enjoy the rate cut if you can, but don’t expect your bills to shrink overnight.