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Australia is in the middle of a cost of living crisis but we’re not the only ones. Here’s what inflation looks like around the world

A person pushing a big ball with a dollar sign on it up a steep slope.

Aussies are well aware that the cost of living is increasing. Prices of food, gas, petrol and rent have skyrocketed thanks to the inflation rate rising to 6.1 per cent in June – to 21-year high.

While the Australian Bureau of Statistics reported a 2.4 per cent rise in annual wage growth for the March quarter, this has not been enough to compete with the soaring cost of living, leaving people struggling around the country.

But we’re not the only ones.

The Organization for Economic Co-operation and Development (OECD) is an international organization that includes 38 countries such as Australia, the USA, Canada, New Zealand and the UK.

International events such as supply chain interruptions, COVID-19 implications and the war in Ukraine saw inflation in OECD countries rise to 9.6 per cent in May compared to 9.2 per cent in April. This represents the sharpest price increase since 1988.

Here’s a crash course in inflation and what it looks like around the world.

What is inflation and what causes it?

Inflation measures how much more expensive a set of goods and services has become over a certain period of time.

The most well-known indicator of this is the Consumer Price Index (CPI).

The CPI measures the percentage change in the price of a basket of goods and services consumed by households.

Temporary changes in inflation may be caused by events like supply disruptions or seasonal sales, according to the RBA.

More persistent changes in inflation generally arise when people and businesses change their expectations about future price moves, and thus start demanding higher wages or passing on cost increases to their customers to compensate for them.

In the worst case, these expectations of rising prices can cause inflation to spiral out of control.

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Business

Oil giant Saudi Aramco: Company makes $700 million in profit every single day

Oil giant Saudi Aramco: Company makes $700 million in profit every single day

Oil giant Saudi Aramco made an astonishing $700 million in profit every single day, the biggest quarterly profit of any publicly listed company in history.

The Saudi Arabian petroleum and gas company reported an eye-watering $68 billion (US$48.4 billion) of profit in the second quarter of 2022.

Its earnings were boosted by surging demand as Covid-19 restrictions were dropped around the world — and pushed even higher by Russia’s invasion of Ukraine.

Net income leapt 90 per cent year-on-year for the world’s biggest oil producer, which clocked its second straight quarterly record after announcing $55.46 billion (US$39.5 billion) for Q1.

Aramco’s massive Q2 windfall was the biggest quarterly adjusted profit of any listed company worldwide, according to Bloomberg.

The state-owned Saudi firm heads a list of oil majors raking in massive sums after ExxonMobil, Chevron, Shell, TotalEnergies and Eni also revealed multi-billion-dollar profits in Q2.

US President Joe Biden blasted ExxonMobil earlier this year as inflation surged, stating it made “more money than God”.

And the future looks bright for Saudi Aramco.

“While global market volatility and economic uncertainty remain, events during the first half of this year support our view that ongoing investment in our industry is essential,” Aramco president and CEO Amin Nasser said.

“In fact, we expect oil demand to continue to grow for the rest of the decade,” he added.

Net income rose 22.7 per cent from Q1 in “strong market conditions”, Aramco said.

Half-year profits were $123.41 billion (US$87.9 billion), up from $66.27 billion (US$47.2 billion) for the same period of 2021.

Aramco will pay a $26.39 billion (US$18.8 billion) dividend in Q3, the same as it paid in Q2.

It “continues to work on increasing crude oil maximum sustainable capacity from 12 million barrels per day to 13 million by 2027”, its earnings announcement said.

The quarterly profits, the highest since Aramco’s record-breaking IPO in 2019, beat a company-compiled analyst forecast of $64.86 billion (US$46.2 billion).

Aramco shares closed down 0.9 per cent at 40.5 riyals ($15.16) on the Saudi stock exchange. They are up 25 per cent this year.

‘crown-jewel’

Aramco floated 1.7 per cent of its shares on the Saudi bourse in December 2019, generating $41.28 billion (US$29.4 billion) in the world’s biggest initial public offering.

The “crown jewel” and leading source of income for the conservative kingdom temporarily supplanted Apple as the world’s most valuable company in March. It now lies second in the list with a market valuation of $3.37 trillion (US$2.4 trillion).

Saudi Arabia has sought to open up and diversify its oil-reliant economy, especially since Mohammed bin Salman’s appointment as crown prince and de facto ruler in 2017.

Despite raising production, Aramco has pledged to reach “operational net zero (carbon) emissions” by 2050. Carbon pollution is tallied in the country that uses the fuel, not where it is produced.

Saudi GDP jumped nearly 12 per cent in Q2 on the back of high oil prices, the government announced last month.

Abu Dhabi-based energy expert Ibrahim Elghitany said the oil bonanza was a “golden opportunity” for the country.

“Saudi Arabia has recently achieved financial surpluses that it did not achieve during the last decade, which helps to provide financing for its development projects,” Elghitany told AFP.

Nasser said Aramco recovered quickly from a series of attacks by Yemen’s Huthi rebels on its facilities earlier this year, including a dramatic strike in Jeddah that sent smoke billowing during a Formula One practice session in March.

“We were able to restore our production in all these facilities immediately. In a few weeks, all facilities were working and producing at full capacity,” he told a media conference call.

Oil prices have dropped by $42 per barrel from a peak in June due to growing supplies, but remain close to $140 (US$100).

The OPEC group of oil-producing countries has been gradually raising production, despite pressure from Western leaders including US President Joe Biden — who visited Saudi Arabia last month — to pump more.

Biden’s trip was seen as a climb-down after he previously promised to make Saudi Arabia a “pariah” over the killing of Washington Post columnist Jamal Khashoggi by Saudi agents in Turkey in 2018.

British Prime Minister Boris Johnson has also visited Saudi Arabia since the Russian invasion in February.

High oil prices are contributing to the inflationary pain suffered by consumers worldwide.

– with Andrew Backhouse, AFP

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Business

Choice survey reveals Aussies are under the pump trying to pay their bills

Choice survey reveals Aussies are under the pump trying to pay their bills

New research has revealed nine out of 10 Aussies say they are struggling to manage their household budgets amid the rising cost of living.

A survey by consumer group Choice found 90 per cent of more than 1000 participating households said their bills had increased since 2021 – with the biggest financial burdens health insurance and utilities.

Choice editor Marg Rafferty said almost all Aussie households were feeling the pressure of price rises, with the report highlighting how difficult it’s become to manage the household budget.

“Among the biggest financial burdens, the research found, was health insurance and utilities,” she said.

“Cost of living pressures continue to be a major issue for Australians.”

Almost three in five respondents reported concerns about their disposable income, with pulse data revealing 23 per cent of households are struggling to get by, which is up from 18 per cent in June last year.

Ms Rafferty offered advice to Australians struggling to keep up with their bills, saying “there’s a chance you could be getting a better deal elsewhere”.

“Our research shows you can save up to $935 a year on hospital cover by switching to a similar policy with a different provider.” she said.

“It always helps to spend some time comparing what’s on the market.”

According to the Australian Bureau of Statistics, household spending in June was up more than 10 per cent compared with the same time period last year.

But household bill hikes are not the only thing Aussies are spending their money on, with residents feeling the pinch of an additional 15 per cent increase on services and 5 per cent rise on goods.

The monthly figures, which were released on Tuesday, revealed both discretionary and non-discretionary spending increased following an inflation rate of 6.1 per cent.

Non-essential costs rose by 10.8 per cent, driven by spending in recreation and cultural activities, while essential spending rose by 9.8 per cent, due to the rising cost of transport.

The most significant area of ​​spending was on transport, up 22.7 per cent, driven by higher oil prices due to the ongoing war in Ukraine and the demand for air travel.

Spending at hospitality businesses like hotels, cafes and restaurants was up 17.1 per cent in what is viewed as a positive return to pre-pandemic levels.

There was also strong growth in spending on clothing and footwear – up 16.3 per cent, as well as a 15.5 per cent increase in recreation and culture.

Jacqui Vitas, from the Australia Bureau of Statistics, said June marked the 16th consecutive month of through-the-year increases in total household spending.

“This was off the back of consistent decreases in total household spending from March 2020 to February 2021, as responses to Covid-19 were experienced across the country,” she said.

“Spending categories most impacted from Covid-19 responses – transport, hotels, cafes and restaurants, and clothing and footwear – have now returned to pre-pandemic levels.”

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US

Karine Jean-Pierre roasted over ‘Orwellian’ tweet touting ‘0% inflation’

Karine Jean-Pierre roasted over 'Orwellian' tweet touting '0% inflation'

President Biden’s top spokesperson was accused of lying on Wednesday in a tweet touting “0% inflation in July” — even as federal data indicated that the consumer price index rose by 8.5% year over year.

“We just received news that our economy had 0% inflation in July,” White House press secretary Karine Jean-Pierre tweeted on Wednesday.

“While the price of some things went up, the price of others, like gas, clothing, and more, dropped.”

Jean-Pierre also hailed the dip in gasoline prices, which she called “the fastest in a decade” which was “saving American families with two cars $106 per month on average.”

In the same tweet thread, Jean-Pierre wrote that “real wages went up for the first time in almost a year.” She also urged the House to pass the Inflation Reduction Act “as soon as possible” in order to “lower health care, prescription drug, and energy costs.”

But Twitter users pushed back against Jean-Pierre’s claims.

White House press secretary Karine Jean-Pierre toed the administration line that the country saw "0% inflation in June."
White House press secretary Karine Jean-Pierre toed the administration line that the country saw “0% inflation in July.”
REUTERS
Twitter users pushed back on Jean-Pierre's tweets on Wednesday.
Twitter users pushed back on Jean-Pierre’s tweets on Wednesday.

“Great. No need for the ‘Inflation Reduction Act’ anymore…” tweeted Yossi Gestetner.

Another Twitter user, Kevin Dalton, posted a link to a news article indicating that inflation was 8.5% in July, writing: “Other than the complete lie you just told, I totally believe you…”

Joel Griffith, a research fellow at the Heritage Foundation, posted a tweet showing the increased prices of key goods.

“Inflation this past year of 8.5% is near a 40-yr high,” he noted.

One Twitter user went so far as to add a “clown face” filter to a clip of Jean-Pierre touting the strength of the economy from the White House press room podium.

The rate of inflation was 8.5% in July -- hovering around record levels not seen in four decades.
The rate of inflation was 8.5% in July — hovering around record levels not seen in four decades.

Supporters of the administration, however, tried to clarify Jean-Pierre’s tweet. One noted that the press secretary meant that “inflation over the last month has been 0%” and that it “hasn’t increased in the past month.”

But another Twitter user responded: “You don’t compare inflation month to month. It is compared year to year. But you wouldn’t know that.”

Last month, Jean-Pierre was widely mocked for claiming that “we are stronger economically than we have been in history.”

Americans continue to be saddled with higher-than-usual food prices.
Americans continue to be saddled with higher-than-usual food prices.
Levine-Roberts/Sipa USA

She cited low unemployment as well as “more than 8.7 million new jobs created” — though critics noted that it was due to the end of pandemic-related lockdown measures and Americans returning en masse to the workforce after the vaccination drive.

The 8.5% rise in inflation last month was lower than the sharp, 9.1% increase in June, but still hovering at a high not seen since four decades ago.

Core inflation, which excludes food and gas prices, rose by 5.9% annually and by 0.3% compared to June.

Analysts said that a drop in demand has led to falling gas and energy prices, though that trend can easily reverse itself given volatile geopolitical conditions, including the ongoing Russian invasion of Ukraine, as well as possible hurricanes in the US.

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Australia

Northern Territory opposition calls for petroleum price inquiry, with prices per liter 30 cents higher than in other states

A close-up of a man's arm refuelling a white ute at a petrol bowser.

Pressure is growing on the Northern Territory government to take action on stubbornly high fuel prices, with calls for a fresh inquiry to quiz retailers on the reasons behind the rates.

Drivers in Darwin were paying around $1.95 a liter for petrol on Tuesday, despite the wholesale price sitting close to the average of interstate capitals of $1.59.

The average price per liter in New South Wales was $1.67, almost 30 cents a liter cheaper than the Northern Territory.

Opposition leader Lia Finocchiaro has called for a new parliamentary inquiry, which she said could potentially recommend a cap on profits or prices.

“Territories are paying [up to] 40 cents a liter more for their fuel compared to any other jurisdictions in the nation,” Ms Finocchiaro said.

“The power of an inquiry means that we can call fuel retailers and fuel companies to sit at the table and they have to explain to the public and the parliament why it is that territories are paying so much.”

Lia Finocchiaro talking to Ben Hosking in front of a sign reading 'Drive Down Fuel Prices'
Opposition leader Lia Finocchiaro (left) says retailers should explain their prices to parliament.(ABC News: Matt Garrick)

Petrol prices this year rose higher in the Northern Territory than in any other jurisdiction, according to the latest official data.

“Automotive fuel” was up by 6.2 per cent, well above the capital city average of 4.2 per cent.

The Northern Territory opposition is also proposing legislation that would force retailers to publish their profit margins.

In a statement, Chief Minister Natasha Fyles said the government “stood ready to take further action” if apparent profit margins remained high “without a reasonable explanation”.

Ms Fyles said she had written to the Australian Competition and Consumer Commission (ACCC) and to fuel companies on the issue but did not say what she had told, or asked, them.

‘There would be higher’ at similar prices in Sydney or Melbourne

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Business

ABS: Monthly household spending indicator reveals 10 per cent more spending

ABS: Monthly household spending indicator reveals 10 per cent more spending

Household spending in June was up more than 10 per cent compared with the same time last year, as Australia struggles through skyrocketing cost of living.

The latest monthly spending figures, released on Tuesday by the Australian Bureau of Statistics, show household spending increased 10.2 per cent through the year, with a 15.9 per cent increase on services and a 5.0 per cent increase on goods.

Both discretionary and non-discretionary spending increased – not surprising given the rate of inflation is 6.1 per cent.

Discretionary spending rose by 10.8 per cent, driven by spending in recreation and cultural activities, while non-discretionary spending on essentials rose 9.8 per cent, due to the rising cost of transport.

The most significant area of ​​spending was on transport, up 22.7 per cent, driven by higher oil prices due to the ongoing war in Ukraine and the demand for air travel.

Spending at hospitality businesses like hotels, cafes and restaurants was up 17.1 per cent in what is viewed as a positive return to pre-pandemic levels.

There was also strong growth in spending on clothing and footwear – up 16.3 per cent; as well as a 15.5 per cent increase in recreation and culture.

Jacqui Vitas, from the Australia Bureau of Statistics, said June marked the 16th consecutive month of through-the-year increases in total household spending.

“This was off the back of consistent decreases in total household spending from March 2020 to February 2021, as responses to Covid-19 were experienced across the country,” she said.

“Spending categories most impacted from Covid-19 responses – transport, hotels, cafes and restaurants, and clothing and footwear – have now returned to pre-pandemic levels.”

Queensland and Victoria recorded the highest state-based increases in spending through the year, spending 12.4 per cent and 11.8 per cent respectively more.

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Business

Cost of living crisis: Sydneysiders rush to eastern suburbs petrol station while fuel prices are cheap

Cost of living crisis: Sydneysiders rush to eastern suburbs petrol station while fuel prices are cheap

Australia’s cost of living crisis has been laid bare after Sydney residents rushed to a local petrol station upon hearing that prices were much lower than normal.

By the time most arrived, however, the price had fluctuated and was back to a more expensive level.

On Saturday morning, just past 9am, a thoughtful resident spotted that petrol prices were unusually cheap at a service station in Randwick, in Sydney’s east.

She took a quick snap and shared it a local community group, prefacing the image with “Cheap petrol Clovelly Rd.

“I don’t drive but plenty of cars buying.”

It was as low as 115.8 and 129 cents per liter (unleaded and premium unleaded respectively) but just an hour later, the prices had jumped to 161 and 175 cents per liter.

The original poster promised to notify her community if she spotted low prices again.

The current average price for regular unleaded fuel in Sydney is at 169.1 cents per liter, according to the NRMA’s weekly fuel report.

It comes as Australia has been caught in the throes of a cost of living crisis as inflation, rising interest rates and supply chain issues have made it harder to get ahead financially.

In the last quarter, transport costs rose 13.1 per cent as the price of fuel rose to record levels for the fourth quarter in a row.

Prime Minister Anthony Albanese has previously said he would not extend the 50 per cent fuel excise cut, due to expire September 28, due to the cost to the budget bottom line.

To extend it for another six months would cost the government $3 billion.

Last month, data found that Australians were spending nearly three-quarters more on petroleum each month than they were less than a year ago.

In June, the average monthly spend on petroleum in Australia was $192.63, an increase of $82.05 (74.19 per cent) from September 2021.

These heavy prices have made Australians become more strategic and considered with their driving habits, with more than 60 per cent now shopping around for cheaper fuel.

—With NCA Newswire

Read related topics:sydney

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