While there have always been many different versions of Australia existing simultaneously across our vast nation, the pandemic really rammed home how vastly different life could be even within Aussie borders.
But now with the pandemic hopefully in the rear-view mirror forever, the divergence between the different conditions being experienced by Australians remains quite stark.
Rather than being divided by region, state or suburb, the divergence between different demographics is occurring in our own local communities.
A tale of two extremes
At one end of the spectrum, there are Australians who could scarcely be doing better, who have seen their assets appreciate strongly since the pandemic began and are now enjoying the strongest nominal wages growth in years.
In this section of society there is a shortage of popular champagne brands.
“The champagne shortage is real,” said Emperor Champagne CEO Kyla Kirkpatrick.
“Leading into Christmas, consumption has been bigger than supply on certain products, so we’ve been allocating customers, rationing the big brands and trying to move them to other products.”
At the other end of the spectrum, a recent report from Foodbank Australia paints a very different picture.
According to survey data, 21 per cent of Australian households experienced severe food insecurity in the past 12 months, with a further 12 per cent experiencing moderate food insecurity.
The study defined ‘Severely food insecure’ as reports of multiple indications of disrupted eating patterns and reduced food intake.
‘Moderately food insecure’ was defined as reports of reduced quality, variety or desirability of diet, little or no indication of food intake.
Inflation not created equal
But once you move away from these two extremes of Australian society, the experience of inflation for different demographics remains highly variable.
In headline terms, the current annual inflation rate is 7.3 per cent. But when you delve deeper into the figures a divergent picture emerges.
In terms of non-discretionary items such as food, fuel, housing, utilities and health costs, inflation is currently running 8.4 per cent. For non-discretionary items, inflation is running at a marginally less concerning 5.5 per cent.
For groups like aged pensioners, carers, disability pensioners, low income earners and a long list others, inflation is biting particularly hard due to a high proportion of their incomes being spent on non-discretionary items.
While aged pensioners and those unemployment benefits have seen their payments boosted by 6.1 per cent in the past year, it is significantly below the 8.4 per cent increase they are seeing in their non-discretionary costs.
Rising food prices in particular have been the thorn in the side of many households hard hit by inflation over the past year, with prices up by 9 per cent.
Fruits and vegetable prices have risen even faster, up by 16.2 per cent over the year, although this figure has been impacted by recent floods in some of the nation’s key food producing regions.
Inflation varies by state
Despite all states and territories recording some of the hottest inflation figures in decades, the variance in the magnitude of the rise of the cost of living being experienced in the capital cities can be quite significant.
The highest inflation nationally is to be found in Hobart, where it is running at 8.6 per cent, leaving Tasmania with more in common with energy crisis hit Greece where inflation is 8.5 per cent, than with parts of the rest of the country with significantly lower inflation.
On the other hand, the lowest inflation in the nation is found in the West, with Perth recording an inflation rate of 6.0 per cent, well below the national figure of 7.3 per cent.
However, it is worth noting that electricity costs technically fell by 84.3 per cent in Perth in the September quarter, due to the WA government’s $400 Household Electricity Credit.
The inner workings of the CPI
While the CPI is the main lens through which the cost of living is judged by policymakers and the RBA, there are times when it is not representative of the cost of living being experienced by some Australians.
The CPI is based on the cost of living in the capital cities and measures inflation accordingly. So for the almost one third of Australians who live outside the capital cities, their cost of living pressures are not measured by the Consumer Price Index.
There is also the issue of the CPI not fully capturing the rising cost of new rents. The rental component of the CPI is measured based on a sample of all rents in aggregate, not the advertised cost of signing a new lease. This has led to the rental component of the CPI lagging the rise in advertised rents historically and in recent years this divergence has intensified significantly.
According to the latest inflation data from the ABS, rental inflation in the capital cities is currently 2.8 per cent.
The snapshot of asking rents given by private data providers is quite different, with SQM Research’s data indicating that capital city rents had risen by 23.8 per cent in the past 12 months. Meanwhile, Domain reported a 12.8 per cent increase in asking house rents and a 16.7 per cent increase in unit rents in the year to the end of the September quarter.
Divergent outcomes
In 2020 and 2021, our nation saw wildly different outcomes based on region, city and in some cases even suburb, as the pandemic played out across Australia.
But in 2022, the divergence exists not only between different states and territories, but even more between households who are doing well and seeing their costs rise at a manageable rate and others who may be on a fixed income like an aged pension who have seen costs rise far more relative to their means.
Ultimately, the cost of living is being felt vastly differently in our own collective backyards, perhaps even a stone’s throw from our front doors.
Tarric Brooker is a freelance journalist and social commentator | @AvidCommentator