In 2022, Australians are seeing a significant increase in cost of living expenses with gas, fuel, electricity and food prices all on the rise and set to continue to hike up bills across the county. It feels like daily life has never been more expensive. So let’s look at why the cost of living in Australia is increasing and what you can do to mitigate its worst effects.
Inflation is outgrowing wage increases.
Inflation – the rise in the price of everything – has increased at a faster rate than Australian wages. Wages and inflation are subject to continuous change, with events such as the 2008 financial crash and our recent worldwide pandemic, COVID-19, impacting inflation worldwide.
If inflation rises quicker than Aussie wages, then it’s a pretty simple equation: the necessities of life cost more but your relative wealth is less. As a result, a once attainable lifestyle could become out of reach.
The Australian government just announced an increase to the national minimum wage, effective July 1. While this will provide much needed help to lower-income earners, inflation is still outpacing wage increases.
Fuel prices continue to rise.
No doubt you’re sick of hearing, reading and thinking about the current eye-watering, wallet-emptying fuel prices. The war in Ukraine is the primary factor that has inflated the price of petroleum and diesel. Russia is one of the world’s leading fuel suppliers, so with the worldwide sanctions on exports, many countries have to compete for fuel from other areas. Although Australia wasn’t getting its fuel directly from Russia before the war, the increased competition for resources has increased the price for everyone. Hence, you’re staring at a figure over $2.00 a litre when you get to the petrol station.
Gas prices increase in Australia.
It’s a similar story with national gas prices. While Australia produces a substantial amount of gas, most of this is exported internationally. Again, Russia is a major exporter of gas, so countries need to find gas elsewhere, increasing demand and market value. So while Australia produces gas, it’s still more or less at the mercy of the international market value.
Energy Minister, Chris Bowen, described the rise of gas prices as a “perfect storm” of multiple factors such as coal plant vulnerabilities, colder weather and the Russian sanctions. Coal plants have been experiencing a continuous run of blackouts and shutdowns, meaning more gas is needed to compensate and provide the required energy. (Did someone say renewable energy?) In colder weather, we use more gas, so given that it’s currently Australia’s winter, demand is at its highest.
These factors are all indicators that the cost of gas will continue to be steep for the foreseeable future. Western Australians are experiencing slightly better gas prices because of WA’s domestic gas policy but prices are still continually increasing.
Electricity prices soar.
Electricity is also becoming increasingly more expensive across the country, with estimates that an Australian household could be paying hundreds of dollars more in power bills annually. These price increases vary from state to state – you can see the ABC’s estimates here.
These inflated energy costs have been born because of similar reasons gas has risen in price – the war in Ukraine, coal plants experiencing temporary shutdowns, other supply chain disruptions and a seasonal demand increase.
Australia’s electricity prices are just following the indubitable rule that when demand goes up, and supply goes down, prices climb to new heights.
Read our article for an in-depth look at rising electricity costs.
Rising food prices in Australia.
An iceberg lettuce (yes, just one) in Queensland at the moment could cost you $12 – yep, it’s getting a little out of control.
Food inflation is up 4.3% from last year, with vegetables and meat increasing the most: 6.7% and 6.2%, respectively. A run of detrimental weather on Australia’s east coast is to blame for much of the national food price increases, with statistics indicating that there could be more storms in the near future.
Climate change makes the earth’s weather more unpredictable, and these sorts of food crises are outcomes scientists have warned us about. The more unpredictable and savage the weather is, the more stress it places on the farms where we get our food, resulting in more expensive food.
How do you reduce your cost of living expenses in 2022?
Okay, so we’ve waded our way through the bad news. It certainly creates a stark picture, but is there anything we can do about it? Definitely! Fuel, gas and electricity can all be satisfied by clean and cheap renewable energy.
Renewable energy infrastructure continues to grow.
We’ve known for a while how important it is for humanity to make the collective move towards renewable energy. We’ve had scientists telling us that our current energy practices (read: burning fossil fuels) are making our environment and climate unstable.
Renewable energy now becomes more than just an altruistic and climate-conscious choice – it has the capability to save Australian households vast amounts of money while providing greater energy independence. This means that if these cost of living prices continue to trend upward, you could still be living securely and safely cushioned from the worst of the blow.
Here in Australia, our renewable energy infrastructure has been slowly growing, and there’s never been a better time for everyday Aussies to make the switch to clean energy.
Solar is the easiest way to adopt renewable energy in your home.
Australia is one of the sunniest countries in the world, giving residents the perfect opportunity to use solar energy to run their homes (and cars!). Solar energy is clean power that you can generate, store and use, reliant only on your system and taking away the need for the unpredictable and increasingly expensive electrical grid.
Here at Plico, we install industry-leading solar + battery systems without any big upfront costs. We’re passionate about renewable energy and want every Western Australian to have the chance to start using clean power. You could start generating, storing, and using solar energy for as little as $36.90 a week.
Get an electric car!
Not only are petroleum and diesel not particularly good for the environment, but they’re also extremely expensive (and we shouldn’t expect the price to go down any time soon). The future of energy is a home solar + battery system where you can also charge your electric car with your generated solar power. Electric vehicles are cheaper to run and help battle climate change at the same time!
Electric cars are consistently getting cheaper, and Western Australia has even (finally) introduced a rebate for buyers! Read our article about charging electric cars with a solar + battery system for more information.
Eat-in and shop strategically.
The cost of food is a little harder to navigate. I mean, you can’t just decide to stop eating, can you? So Australians, especially young families with multiple mouths to feed, will find the current period a rough ride.
The first thing to do in an attempt to battle culinary costs is to stop eating out. While restaurants and cafes offer pleasure for your palette, the difference in expense between cooking yourself and buying your meals stacks up. It’s also probably time to start opting for the generic brands of products – every little bit counts!
The type of energy you use impacts your wallet.
While it’s frustrating to see gas, electricity and fuel prices increasing, it just gives us more incentive to embrace renewable energy. As a result, we won’t only be helping combat the effects of climate change, but we can save a significant amount of money in the process.
As cost of living expenses increase, a solar + battery could cut your household bills. Chat with a switched-on Plico team member to see if a solar + battery system could fit your needs or use our Solar Energy Savings Calculator to see how much you could save.