Australians were hit with the bad news that inflation came in hotter than expected in the first three months of the year – dampening hopes for interest rates to be slashed – but also exposing their desperate need for a pay rise to keep up with cost of living hikes.
The consumer price index (CPI) rose 1 per cent in the first three months of 2024, the Australian Bureau of Statistics reported, up from 0.6 per cent in the December quarter, and well above the 0.8 per cent increase forecast by economists.
The quarterly result brought annual headline inflation to 3.6 per cent.
This means the average working Australian earning an annual income of $98,218 would have needed a $3536 pay rise to have kept pace with inflation over the past year, according to Canstar’s analysis.
For those on $70,000, they would need their pay packet to grow by $2520 to tackle higher prices, while people earning $110,000 required an extra $3960 a year.
Higher income earners on $130,000 needed to seek out a pay rise of $4680 to keep up with the cost of living, while those with a salary of $210,000 required an extra $7560 to top up their pay packet.
“If you haven’t job hopped or your boss hasn’t increased your wages to keep pace with inflation in the past year, a common case for many working Australians, you might need to take matters into your own hands to offset the shortfall,” said Canstar’s group executive of financial services Steve Mickenbecker.
“According to Canstar’s Cost of Living Comparison, switching to the cheapest or best-value options for expenses like home loans, car insurance, electricity, internet, phone plans and even the weekly grocery shop can amount to savings.
“It may be possible to save close to $12,741 in the first year alone by making changes. Savings like this could improve the financial strain caused by inflation on household budgets.”
It comes as new research published in recruiter Robert Half’s 2024 Salary Guide found
Australian employees are expecting to be compensated for their work arrangements, whether they attend the office or work from home.
Almost two thirds of workers said they want commuting assistance or allowance for fuel if they are expected to attend the office.
At the same time more than half of employees showed a preference for an allowance for home office equipment from their employer and 61 per cent expect financial allowances to work from home if they are hybrid.
“Employees no longer see some benefits as an extra but rather an expectation,” said Robert Half director Nicole Gorton.
“The hybrid and remote workplace has strongly influenced the benefits employees expect with the in-office worker, the remote worker and the hybrid worker all wanting to be compensated across various work setups.”
Yet there is a mismatch between what perks employers offer or plan to provide versus what employees really want in 2024.
Businesses are planning to give extra leave entitlements, company equipment and increased superannuation contributions, according to the survey, but employees are prioritising money-related perks such as health insurance, a flexible benefits program and an extra bonus.
“Benefits can be an important differentiator for employees when it comes to accepting a job offer and looking to work elsewhere, particularly when the salary isn’t spot on,” said Ms Gorton.
“As well as providing value for employees by financially offsetting some of their work-related costs, perks and benefits also provide value for employers who may not be in the position to offer increased salaries.”
Meanwhile, Australians continue to get slugged by price increases and as a result their pay packet needs to stretch further.
The most significant price rises in the March quarter were rents up 2.1 per cent, secondary education has increased by 6.1 per cent, tertiary education soared by 6.5 per cent and medical and hospital services rose by 2.3 per cent.
Mr Mickenbecker warned the increase in the March quarter will not only delay rate cuts probably into 2025 but also puts the potential for interest rate increases back onto the agenda.
“The past 18 months have brought home to the community just how stressful inflation can be, something the Reserve Bank was always well aware of,” he said.
“Unfortunately, mortgage holders and renters have felt the worst of that pain and could be up for even more if the March result leads to another cash rate increase.
“A cash rate increase of 0.25 per cent adds around $100 on average to the monthly repayment for a $600,000 loan over 30 years. That hurts when prices for almost everything else have gone up again, this time by one per cent over the last three months.”