Cost of living? We should be more concerned about something else

April 8, 2026 — 5:00am

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Strange things have been happening in Australia while I’ve been off for a few months, taking it easy and having fun in a hospital bed. The most obvious is that we remain terribly unhappy about the cost of living, with the Iran war’s effect on petrol prices giving our money worries an almighty boost.

I read that consumer confidence is at its lowest since we started measuring it.

Sorry, but I’m not too worried about the cost of living. Strangely, it’s a sign of how well we’re doing. If you follow the polling on what people regard as our biggest problems, you’ll know that living costs are always high on the list.

They’re our default setting. If prices are always rising – even if not by much – they’re always something to grumble about. If they’re at the top of the list, it’s a sign we don’t have anything worse to concern us.

For instance, not many people are worried they might be at risk of losing their job. Which matters more – rising prices or having a job so you can pay those prices? Actually, the proportion of Australians who have a paying job has never been higher. The rate of unemployment hasn’t been lower for almost all the time I’ve been an economics journalist.

If prices are rising, it’s pretty safe that wages are too. You shouldn’t need to be an economist to see that what matters more is whether wages are rising at least as fast as prices.

It’s characteristic of human nature to focus........

© The Age