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Chalmers said while he received free advice to either provide much more cost-of-living relief or “slash and burn” the budget and provide less assistance, he would be looking to strike a “series of correct balances”.
One area in which consumers have felt the most price pain over the past three years has been in supermarkets. Food inflation hit 9.2 per cent in the December quarter of 2022 – well above the overall inflation rate peak of 7.8 per cent.
Prices in key kitchen staples have fallen since. Bread inflation reached 14 per cent at the end of 2022 while for dairy goods, it climbed to 15.2 per cent. Both are expected to have fallen below 3 per cent in Wednesday’s report.
Some grocery items are likely to get cheaper over coming months, including dairy, meat, health and beauty, although a spike in global sugar and cocoa prices could push up chocolate costs.
The surge in prices has led to a substantial increase in the proportion of shoppers chasing specials between different supermarkets or specialist stores. In its recent submission to the competition watchdog’s inquiry into supermarkets, Coles noted its internal customer surveys showed 87 per cent of shoppers looked at ways to minimise their grocery bill over the past year.
Four in five consumers spread their monthly grocery shopping across multiple supermarket brands to find the best bargains.
Petrol, the single largest expenditure of most households, is also getting cheaper.
Petrol prices have fallen by almost 10 per cent since the start of July.Credit: James Davies
The Australian Institute of Petroleum on Monday reported the average price for a litre of unleaded fuel was 177.5¢ over the past week. In October last year, the national average reached $2.11 a litre.
Through the September quarter alone, average petrol prices dropped by almost 10 per cent.
Opposition Leader Peter Dutton said he believed the Liberal National Party’s victory in Queensland could be replicated at the federal level, partly due to the financial pain being felt by ordinary Australians.
“The lessons are that if you treat people with contempt, if you run up a huge debt, you mismanage the economy, you create a cost-of-living crisis, you can expect the electorate to punish and that is exactly what happened in Queensland,” he said.
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As Australian shoppers cut their spending, more businesses are struggling to make ends meet.
Figures compiled by credit monitoring firm CreditorWatch show 16.2 per cent of businesses in the hospitality sector are at risk or high risk of failing over the coming 12 months.
High interest rates, energy price rises, fewer visitors to CBD locations and lower consumer demand are all hitting hospitality businesses. Expected failure reports for other sectors are substantially lower.
CreditorWatch chief executive Patrick Coghlan said hospitality businesses would enjoy a lift in conditions only if consumers felt a reduction in cost-of-living pressures.
“Discretionary spending is one of the few ways that consumers can actively cut costs, whether that’s eating out less, buying fewer coffees at cafes or not seeing so many concerts or theatre shows,” he said.
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