Cost of Living in 2027: Our CEO’s Outlook

Australians have spent years waiting for the cost-of-living pressure to ease. My reflection on this year’s Household Budget Barometer is that relief will be slower than many households hope.

Unfortunately, it’s more likely that the pressure will change shape than disappear.

Our findings show how deeply it is already embedded. Eighty-five per cent of Australians surveyed said inflationary pressure had lasted longer than expected, 61% described themselves as financially fatigued and only 9% believed the cost of living was improving.

I hear the human impact of that in my role every day. When Australians are talking cost of living, it is not just one bill. It is the combined weight of all of them. It is the mortgage repayment or rent, the weekly grocery shop, the electricity bill, the insurance renewal or the health insurance premium. Each expense may be manageable in isolation, but together they are placing enormous pressure on Australian households.

Customers are wanting to know why their insurance renewal increased, why their mortgage is consuming so much of their income, why the grocery shop is harder to manage and whether a better deal exists.

Last year in this report, I raised the prospect of reform to negative gearing before changes entered the national economic debate. The point was not to claim certainty, but to identify pressures that policymakers would increasingly need to address. I’m incredibly proud that this report continues to contribute to that kind of forward-looking perspective.

Looking ahead to predict where and when relief, or pressure could emerge, is not necessarily a crystal ball exercise. Aside from the obvious impact and flow-on consequences of the global economic environment, these are two things that I’m watching closely.

The first is transport. Policies such as the Electric Car Discount have helped support the uptake of eligible electric vehicles. That transition brings clear benefits, including reducing motorists’ exposure to petrol-price shocks. But fewer petrol and diesel vehicles will likely mean less fuel-excise revenue for the government over time.

Future governments could then face choices about how to replace that revenue.

Lower fuel-excise revenue may not directly mean higher, or sustained inflation immediately. But how that revenue is eventually replaced does matter. If new settings increase the cost of moving people and goods, those costs could flow through freight into higher grocery prices, construction and other essentials. A transition designed to reduce one household cost must be managed carefully, so it does not create another.

The second pressure I see increasing is the cost of protecting the family home.

Our research found quoted home and contents premiums across Australia’s five largest capitals increased by an average of 26% over two years. Building costs have also risen faster than general inflation, while disaster repairs, new housing, infrastructure and large-scale data-centre developments are increasingly drawing on the same limited pool of skilled trades.

Data centres and infrastructure builds will not determine insurance premiums on their own. But stronger competition for electricians, builders and specialist trades could add further pressure to already in-demand tradespeople. If rebuilding costs grow, then my view is that will make its way through to increased insurance premiums.

The signals already suggest that cost-of-living pressure will remain a constant companion for some time to come.

That makes comparison more important, not less. Our report found 68% of Australians had shopped around for at least one major household product in the previous year. Comparison is becoming part of how households manage financial pressure, test whether loyalty is being rewarded and regain some control over their bills.

Compare the Market doesn’t determine prices, prevent natural disasters or predict future tax reform. But we can make complex markets easier to navigate, bring options together and help Australians act when a better-value choice is available.

The road ahead remains uncertain but we’ll continue to advocate for Australians, to empower better financial decisions.

– Rob Clancy

Chief Executive Officer, Compare the Market