Rising Cost of Living in Australia: Six Implications

By Angei, 12 May, 2015

Australia has been becoming an expensive country to live in and that has several different implications for the economy and the residents. In the recent past, Australians living in the country have witnessed their standard of living go up. But that has been negated by rising inflation. Inflation has posed a number of difficult issues before the Australian economy. Let's examine the issues the economy faces and the types of difficulties it brings for the common people. 

Depleting Purchasing Power

Rising cost of living has been sucking out the disposable income from the economy. Inflation means that the value of the Australian Dollar is plummeting in the sense of purchasing power. When people have less disposable income, lesser money is going to circulate in the economy and that is bad for the economy. 

Reduced Savings Ability

Reduced disposable income means that people have lesser money to save. This is especially hard on people who do not have a lot of savings but have started to save. In the long term, the adverse economic conditions are depriving them of a substantial retirement corpus. In a certain way, a lot of people are staring at an uncertain future, unless steps are taken immediately. 

Revenue Loss for the Economy

As inflation continues to mount, it is going to impact the tourism industry, one of the main sources of revenue for the Australian economy. It has been found in a survey that Sydney and Melbourne, once a hands-down favorite for tourists from all over the world, have started to lose attraction because of rising hotel, food and transportation costs. And that has dire implications. This directly impacts the hospitality and the service industry. The airliners are going to carry lesser tourists to Australia. The hotel rooms are going to run empty, even during the peak tourist seasons. As service and the aviation industry takes a hit, so will the revenue going to the Government coffers. 

Poor Job Creation

Job creation happens with more investments. As people continue to bleed money, they are going to cut back on expenses. When spending goes down, the investments go down as well. For an economy to grow, there needs to be encouragement or incentives to spend. As the hotel, aviation and other industries experience loss of revenue, the job creation is going to take a hit. Worse, in the medium and long run, there might be job losses too. The government and the big industries are your best bets to create employment opportunities, with reduced revenue, their ability to invest is going to be impacted badly. 

Reduced Social Security 

Inflationary pressures can adversely impact your financial security. As the government grapples or juggles between different priorities, chances are that it is going to cut back on the social security measures or investments. For example, the interest rates on savings schemes are going to reduce. This is going to make older people even more vulnerable to rising costs of living. It is going to be an extremely difficult choice to cater to present needs by sacrificing a secure future. 

About The Author: Angelina is a professional financial writer and blogger. She is associated with Snug Loans which is reliable platform for getting instatnt cash anytime.