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Cost of living crisis in Australia: how to make ends meet
Australia’s cost of living crisis continues to put pressure on household budgets, with rising costs for groceries, rent, fuel and mortgages making it harder for many Australians to make ends meet. Find out what’s driving cost of living pressures right now and get practical budgeting and money‑management strategies to help you stay in control, even while costs remain high.
What’s going on with the cost of living in Australia?
Australia’s cost of living crisis isn’t over yet. Inflation has lifted to 3.8%, climbing even further past the Reserve Bank of Australia’s (RBA) target range of 2–3%. There is little relief as everyday costs for Australians continue to soar. The cash rate currently sits at 3.85% following recent increases.
So, why does the cost of living still feel so high? And how do you make ends meet when prices for food, housing, utilities, and other essentials continue to stretch household budgets? Here’s the latest on what’s driving costs, plus practical ways to keep your finances on track, even while we’re not fully out of the woods.
Why is the cost of living still so high in Australia?
Australia’s cost of living remains high because everyday essentials, from fuel and groceries to rent and mortgage repayments, continue to rise faster than wages. Energy bills, housing demand, and volatile global prices add extra pressure on families, students, and single-parent households. Below, we break down the main reasons Australians are still struggling with living costs.
Fuel prices remain volatile
Global tensions and supply constraints keep petrol prices unpredictable. The ACCC explains that competition, taxes, and wholesale costs are key drivers of retail fuel prices in Australia. Fuel is one of the most significant weekly expenses for households, and timing your purchase within local price cycles can save money, in some cities, up to 20 cents a litre. To help cut costs, use apps like PetrolSpy to find the cheapest bowser near you.
Grocery bills keep climbing
Food and grocery costs remain one of the biggest pressure points for Australian households. According to CHOICE’s latest supermarket survey (December 2025), 86% of Australians say the cost of food and groceries is still a major concern.
In CHOICE’s basket of 20 everyday and entertaining items, Aldi remained the cheapest at $72.41, compared with $98.98 at Woolworths, $100.04 at Coles, and $109.25 at IGA (without specials), making Aldi around 27% cheaper than Woolworths.
While Aldi continues to offer the lowest overall prices, the gap between Coles and Woolworths remains very tight, with Woolworths just $1.06 cheaper than Coles in this quarter. These results show that while prices may fluctuate and specials can help, grocery bills are still significantly higher than a few years ago, making it more important than ever to shop around, compare unit prices, and plan ahead to stretch your grocery budget.
To save more at the checkout, try these strategies:
- Plan meals: a weekly meal plan can lower food costs and reduce food waste
- Buy in bulk: stock up on non‑perishables during sales and prioritise seasonal produce
- Choose store brands: they’re often as good as big names but much cheaper
- Use price comparison apps: Tellme Smart Price Comparison compares supermarket prices without leaving your couch.
Average rent prices in Australia rise, but growth slows
The median rent in Australia rose to $681 a week in January 2026, based on the latest numbers from Cotality (formerly CoreLogic). Rent values have risen 5.2% over the past year and a whopping 42.9% over the past five years. Australian renters are now spending a record 33.4% of pre-tax income on rent.
What can you do about rent affordability in Australia?
If you can’t afford rent, there are steps you can take to ease the pressure:
- Share living costs by opting for a rental property with more bedrooms and splitting expenses with housemates
- Request a rent reduction, check out our guide on how to ask for a rent reduction
- Consider location trade-offs: moving a little further from the city or transport hubs can reduce weekly rent significantly
- Negotiate lease terms: longer leases may offer stability and sometimes a lower rate
- Look for government and community support: schemes like rent assistance, bond loans, or utility vouchers can provide relief
- Budget wisely: set aside rent as a fixed cost in your budget, and automate payments to avoid late fees
- Ask for help: MyBudget can help you get ahead by creating a budget plan, negotiating with creditors, and finding ways to reduce rent stress. Book a free consultation.
The need for these tips highlights the financial resilience of Australian households, who are finding practical ways to adapt and cope with the ongoing rental crisis.
How are cost of living pressures affecting homeowners with a mortgage?
With the RBA cash rate now sitting at 3.6%, mortgage holders are beginning to see some relief flow through to repayments. On a $500,000 home loan, a cumulative reduction of around 0.75 percentage points from the peak cash rate equates to roughly $220–$240 a month in lower repayments, depending on the loan type and term. While this easing helps, many households are still managing repayments that remain significantly higher than they were a few years ago, following 13 consecutive rate hikes and only a gradual unwind so far.
For a broader look at expenses, check out the Canstar Cost of Living Comparison. It provides national average prices across key categories like food, rent, transport, and utilities, so you can compare your own spending and spot opportunities to save.
We’re seeing pressure right across Australia, but it’s particularly tough in areas with higher property prices and larger loan sizes.
Tammy Barton | MyBudget, Founder & Director
How to make ends meet during a cost of living crisis?
Creating a cost of living budget is the first step to coping with rising prices. A budget acts like a roadmap: guiding your income and expenses so you can spot excessive spending, find extra money to pay off debt faster, and create savings. Here are some quick tips to get started:
Create a cost of living budget
- Create a realistic cost of living budget: write down all sources of income: wages, Centrelink benefits, side hustles, and split your living costs into fixed (rent, mortgage, utilities) and variable (groceries, transport, entertainment). Track your spending for a month with MyBudget’s free Personal Budget Template
- Cut unnecessary expenses:cut back on subscriptions you rarely use, swap expensive nights out for affordable or free activities, and take advantage of community events
- Save on groceries: rising grocery bills make food one of the biggest household expenses. Plan your meals, buy in bulk and swap to store brands, and don’t forget to compare prices at each supermarket to find the biggest savings
- Boost your income with a side hustle: if your cost of living budget still feels tight, explore ways to bring in extra cash. Try one of our 25 top side hustles, sell unwanted items online, or consider picking up some overtime in your employment. Even small amounts add up and help balance your budget.
Will there be more interest rate rises, and when will the cost of living crisis end?
Whether Australians will see further rate cuts in 2026 remains finely balanced. According to Canstar, inflation showed signs of re‑accelerating in late 2025 before easing back to 3.4% in November, still sitting above the RBA’s 2–3% target range. This cooling reduces the immediate pressure for another rate hike, but economists warn the risk hasn’t disappeared. With underlying inflation proving stubborn and the next round of quarterly inflation data set to play a critical role, the RBA is expected to remain cautious. For borrowers, that means rate relief is possible, but far from guaranteed, and any moves are likely to be slow and heavily dependent on incoming data.
“Now is the time to use these savings to continue to pay down your mortgage or even build a savings buffer. That way, you’ll feel more in control no matter what decision the RBA makes next.”
Tammy Barton | MyBudget, Founder & Director
Get help with cost of living pressures
For over 25 years, MyBudget has helped over 130,000 Australians get back on track with their finances, reduce debt, and save money.
Here’s how we can help you with cost of living support:
✅ Budget plans tailored to your needs
✅ We pay the bills (and negotiate with creditors)
✅ Debt relief solutions to ease money stress
✅ Savings plans to help grow your future.
If the cost of living crisis is weighing you down, enquire online or call 1300 300 922 to start your budgeting journey with MyBudget today.
Want to find out how MyBudget clients, Erin & Adam achieved financial success and saved $70,000 with MyBudget. Read their story here.
The cost of living crisis in Australia refers to the rapid rise in everyday expenses such as groceries, rent, fuel, utilities and mortgage repayments, which has outpaced wage growth for many households. Higher inflation, interest rate increases and housing shortages have made it harder for Australians to cover essential costs and maintain financial stability.
The cost of living still feels high because prices for essentials remain elevated, even though interest rates have begun to ease. While some mortgage holders are seeing modest repayment relief, Australians are still paying significantly more for food, rent, energy and insurance than they were a few years ago, and inflation remains above the RBA’s target range.
Australians can make ends meet during a cost of living crisis by creating a realistic budget, prioritising essential expenses, cutting unnecessary costs and finding ways to reduce bills or boost income. Tracking spending, planning groceries, managing rent or mortgage payments and seeking budgeting support can help households regain control and reduce financial stress.
Yes, MyBudget helps Australians manage cost of living pressures by creating personalised budget plans, paying bills on time, negotiating with creditors and helping clients reduce debt and build savings. With structured budgeting support, many people feel immediate relief and gain confidence knowing their money is organised and working toward long-term goals.
MyBudget helps people take control of their finances by creating a personalised budget, organising their bills and providing day to day money management support. We help reduce financial stress, manage debt, build savings and give clients a clear, structured plan for their financial goals. With over 25 years of experience and more than 130,000 Australians helped, our system provides stability, confidence and long term results.
A personal budget reduces financial stress by providing visibility and control over income, bills, spending, and savings. Knowing exactly where money is going, having funds set aside for emergencies, and following a clear plan helps prevent reliance on credit, avoids missed payments, and creates confidence around short-term decisions and long-term goals.
This article has been prepared for information purposes only, and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.
