Following the Reserve Bank's decision to keep interest rates on hold and stamp out hopes of a near-term cut, the national statistics bureau has released indexes detailing the impact of rising living costs on different groups.
For employees - the group most likely to be paying off a home loan - living costs rose 1.3 per cent over the quarter, to be 6.2 per cent higher over the year.
Fruit and veg prices and higher insurance premiums have added to the cost of living. (Joel Carrett/AAP PHOTOS)
Australians on government support payments experienced the sharpest quarterly increase, rising 1.4 per cent over the quarter to be 4.6 per cent higher annually.
This reflected the group's exposure to the rental market, with rents moving higher thanks to low vacancy rates and competition for properties, the Australian Bureau of Statistics said.
All households recorded a rise in living costs in the June release, fuelled by higher insurance premiums and fruit and vegetable prices pushed up by bad growing conditions.
On an annual basis, living costs have not increased as much for self-funded retirees and pensioners as other groups.
Following the August cash rate meeting, the RBA's chief economist Sarah Hunter was peppered with questions from senators trying to reconcile the financial pain their constituents were feeling with the central bank's view of a stronger-than-thought economy.
Growth forecasts had been bumped higher in the central bank's updated economic assessment, reflecting stronger public demand and household consumption.
The RBA expects annual GDP growth of 2.6 per cent in June 2025, up from a forecast of 2.1 per cent in May.
"The economy is running a little bit hotter than thought previously," Dr Hunter told a parliamentary hearing on Wednesday.
Dr Hunter stressed interest rates were a "blunt lever" weighing on some groups more than others, with borrowers hit hard even as some benefited from higher returns on their savings.
Taming inflation would benefit everyone, she added, especially those on the lowest incomes struggling to manage their budgets as prices moved higher.
With demand for goods and services firmer than thought, the RBA expects underlying inflation to take longer to reach 2.6 per cent, just shy of the middle of the two-to-three per cent target range it aims for.
Treasurer Jim Chalmers says there is nothing artificial in helping deal with the cost of living. (Jono Searle/AAP PHOTOS)
Treasurer Jim Chalmers defended his government's cost-of-living support package, including energy bill relief, amid suggestions Labor was doing little to lower inflation and deliver rate cuts sooner.
"There's nothing artificial about helping people with their cost-of-living pressures," he told ABC Radio on Wednesday.
"The Reserve Bank's near-term inflation forecasts are better, not worse, and that's because of the design of our cost-of-living policies."
The forecasts from the Reserve Bank show there would still be difficult months ahead, deputy opposition leader Sussan Ley said.
"There's been a reprieve for now, but it's not going to help with the rising prices that are hitting the pockets of every household and small business," she told Sky News.
"Wasteful spending by this government is adding to inflation and helping to create the problem."
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