I switch on the lamp upon returning to my partner’s house in the evening, but it doesn’t light up like it’s supposed to. I move to the kettle, fill it up from the tap and click it on, but it doesn’t rouse. I yell to my partner downstairs, ‘I think the power’s out’! He immediately bolts up the stairs, taking them two at a time as he so capably does. I watch him stick his arm behind the couch and hear the flick of the power point switch. Now lit, I see the kettle has not just been turned off at the power point, but also unplugged. I stare at him, dumbfounded. He asks me seriously, ‘Haven’t you read the news’?
We are amid a cost-of-living crisis
Whether you’re a news reader or not, it’s difficult to be ignorant to the fact that Australia is amid a cost-of-living crisis. In the March quarter, Australia saw a 2.4% rise in average annual wages, yet this has still not been enough to address the current 21-year inflation high. Many of us find ourselves reasonably questioning, what’s going on here?
It all comes down to a nine-letter word: Inflation. Inflation has become something of a buzz word circulating the media, coffee shops and supermarket aisles of Victoria. Despite this, I’ve noticed that many people around me (myself included), don’t really understand what inflation is – that is, beyond the recognition of it causing havoc on our bank balances.
Generally, the best indicator of inflation is known as the Consumer Price Index or CPI, which measures the percentage change in the price of household goods and services. The CPI is expected to fluctuate here and there due to supply chain disruptions or seasonal sales, though not usually to the extent we are presently seeing.
Australia’s current cost of living has been ranked the 12th highest in the world
I was surprised to read that mid-way through 2022, Australia was ranked as having the 12th highest cost of living in the world, with rent and groceries comprising a large proportion of said costs. While such figures are alarming, we are not the only victim of inflation. The rest of the world is also being wrangled by rising fuel, food, and clothing prices. It comes off the back of the global pandemic and the ongoing war in Ukraine, which has created profound supply chain interruptions.
During the COVID-19 lockdowns, demand for high-cost items such as entertainment units, cars, and home fitness accessories grew substantially. People couldn’t go out to grab a coffee, so they bought expensive coffee machines. Others invested in cars, growing uncomfortable with public transport rides. And, all of this occurred when supply of such items, largely manufactured in non-western countries, was at all-time low. The cost of shipping items to Australia became exorbitant, and many of the few remaining Australian based factories were forced to close due to lockdowns.
Many businesses that did stay open were forced to raise prices of goods and services, to cover increased shipping and manufacturing costs; as well as increase wages to ensure staff retention. This has led to a proportion of the population earning more, willing to pay more for in-demand goods and services, and subsequently driving up prices for all citizens.
Inflation occurs when demand for products and services exceeds supply
Although changes in supply or demand are generally well-tolerated in the economy, problems can start to emerge when extreme demand and supply changes occur at the same time. Accordingly, the Organisation for Economic Co-operation and Development (OECD), an international organisation made up of 38 countries, has had to drastically revise their economic growth forecast for this year and the next. A decline in economic growth is expected to result in greater instability in jobs as well as social, material and psychological welfare (you can read more on the concept of social precarity, here).
Inflation makes EVERYTHING more expensive
The March Census demystified CPI data in Australia, and itemised the cost-of-living crisis. Here are how our most used items fared:
- Fruit & Veg = up 5.8% due to heavy rainfall and floods across New South Wales and Queensland.
- Bread/Cereal = increased 3.1% due to grain supply shortages following Russia’s incursion of Ukraine.
- Alcohol = increased 7%.
- Clothing = increased 4.4% due to higher freight costs.
- Property = increased 5.6% (new houses) due to shortages of building supply shortages, higher shipping costs and continued high levels of construction activity. There were also fewer grant payments made available by the federal government.
- Furniture = increased 7%.
- Fuel = increased overall 4.2% due to sanctions on Russia and greater demand after lockdowns and restrictions ease.
- International Travel = increased 19.9% as the demand to travel continues to exceed airline capacities.
Financial stress can cause fear, anger, disgust, sadness, and shame
These figures aren’t trivial. Financial stress increases the likelihood of an individual experiencing what psychologists term a ‘negative affective state’, which denotes persistent feelings of fear, anger, disgust, sadness, shame, and guilt. Psychologists further warn that what may start out as stress can quickly lead to clinically significant conditions like anxiety and depression.
The crisis is especially concerning for someone like my sister, a small business owner of a deli where six of the eight sandwiches on her menu feature iceberg lettuce. Several weeks ago, at the Queen Victoria Market, I photographed a $14.50 iceberg lettuce from what we would usually consider the ‘cheap’ vendor. What followed was a series of GIF’s, memes and ha-ha emojis. But when I see that my partner won’t stand under the heat lamp anymore, is unplugging every electrical appliance in the house, and has a budget spreadsheet open on his laptop at all times, I realise something’s not right. Indeed, when I hear about people cancelling their psychology appointments due to financial difficulties, the situation doesn’t seem so ‘ha-ha’ funny, anymore. It’s unsettling.
If you are struggling with financial stress, help is out there
Just because the rising cost of living is affecting everyone around you and is largely out of your control, does not mean your negative affective state isn’t serious and important to address. There is a lot of stigma around financial insecurity and debt in our society, where money and money problems are taboo areas people don’t know how to discuss or respond to. We take these issues seriously at Peaceful Mind. We offer a confidential, non-judgmental space to talk through any financial challenges and related stressors you might be encountering.
Under the Better Access scheme, the federal government offers subsidies for psychology appointments ranging from $89 to $131 for our services. We highly encourage you to book in to see your GP, and discuss access to these rebates. In the meantime, reach out to one of our lovely support team staff via phone or email, and get your appointment in the calendar. You don’t need to feel alone or isolated facing money problems. We can get through this precarious time together.
You might also like to read about some tips to manage spending habits (particularly online spending), here.