Australia’s cost-of-living crisis could cost Labor the next election with new figures showing millions are still struggling financially.
Anthony Albanese and his Treasurer Jim Chalmers have been celebrating headline inflation falling to a near four-year low of 2.4 per cent in the December quarter.
But new Australian Bureau of Statistics (ABS) released on Wednesday showed employee living costs last year soared by four per cent, even with generous electricity rebates from the federal government.
Australians with a job are also more likely to be battling higher rents or elevated monthly mortgage obligations.
‘Mortgage interest charges make up a higher proportion of expenditure for employee households,’ the ABS said.
‘Mortgage interest charges rose due to higher mortgage debt levels and the continued rollover of expired fixed rate to higher variable rate mortgages.’
The latest official data showed 85 per cent of borrowers were paying off a variable mortgage rate, which rise and fall with the Reserve Bank cash rate.
Just 15 per cent of owner-occupier borrowers are on a fixed-rate, as mortgage rates went from starting with a ‘two’ in early 2022 to starting with a ‘six’ by late 2023.
Australia’s cost-of-living crisis could cost Labor the next election with new figures showing workers are still struggling financially (a Sydney bartender is pictured)
Low fixed rates, with two and three-year terms, expired in late 2024 – adding to the financial strain for working-age Australians.
Labor’s $300 electricity rebates have brought down household bills and inflation, but working renters enjoyed the least benefit from cheaper power.
‘These households recorded the smallest fall in housing costs this quarter across the household types, due to an offsetting rise in rents,’ the ABS said.
Australia’s Big Four banks are universally expecting the Reserve Bank to cut interest rates on February 18, from an existing 4.35 per cent level, after headline inflation last year fell below the mid-point of the RBA’s two to three per cent target.
This would mark the first monetary policy easing since November 2020, and provide relief from the RBA’s most punishing rate hikes in a generation.
But the good economic news has hardly improved Labor’s political fortunes with Sportsbet’s odds of the government getting re-elected this week widening out to $2.50, from $2.20.
The Coalition’s odds have shortened to $1.57, down from $1.66.
Newspoll, Roy Morgan and Resolve Political Monitor also have Labor trailing the Opposition.
Anthony Albanese (pictured) has been celebrating at headline inflation falling to a near four-year low of 2.4 per cent in the December quarter
A swing of four per cent against Labor, as some polls predict, could see Opposition Leader Peter Dutton win more seats and be best placed to form a minority government after the next election, due by May.
Baby boomers, who are already more likely to vote for the Coalition, are the ones struggling the least with the cost-of-living crisis.
Self-funded retirees and age pensioners saw their living costs rise by 2.5 per cent last year, slightly above the 2.4 per cent consumer price index.
Those on welfare saw their living costs go up by 3.2 per cent.
Australians across all categories benefited from cheaper petrol and electricity prices, linked to the federal rebates.
The final three months of 2024 were in fact the least punishing financially since the Covid lockdowns in mid-2020, but struggling workers, who are more likely to live in a marginal seat, are the ones least likely to be rejoicing.
