Australian CPI peaked at 7.8% in December 2022 — a 30-year high — driven by energy prices, supply chain disruption, and housing costs. The RBA's aggressive rate hiking cycle brought inflation down, but the price level remains elevated and the cost of living is a continued political flashpoint.
Australian inflation in perspective (2026)
7.8%
CPI peak (Dec 2022)
~3%
CPI estimate 2026 (moderated but above RBA target)
2-3%
RBA target band
What's still elevated in Australia
- Rent — continues rising in most major cities due to supply shortage
- Groceries — Coles and Woolworths prices remain well above 2020 levels
- Insurance premiums — rising 10-20%+ annually in many categories
- Electricity — network charges and retail margins keeping bills elevated
How to protect your money from Australian inflation
| Option | Inflation protection | Notes |
|---|---|---|
| High-interest savings (5%+) | Beats 3% CPI currently | Best for emergency fund and short-term goals |
| Mortgage offset account | Saves mortgage rate ~6% | Best for homeowners — tax-free equivalent return |
| Australian equities ETF (VAS) | Long-term inflation hedge | 10+ year horizon, dividends + franking credits |
| Global ETF (VGS, DHHF) | Historically beats inflation | Best long-term inflation protection |
| Cash in transaction account | Loses to inflation | Move to HISA immediately |
💡 Franking credits: an Australian inflation-fighting tool
Australian equities pay dividends with franking credits attached — a tax credit for company tax already paid. For investors in lower tax brackets, franking credits can result in tax refunds, effectively boosting the after-tax yield of Australian shares. This is unique to Australia and not available in most other markets.
Track your budget in Australian dollars
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