The Cost Of Living

Groceries sit 25 to 35 per cent above 2021 levels and are not returning. Renting households now pay a record share of their income, and one in ten pays more than 60 per cent of it. Relief was offered, and it operated on the price rather than the cost, so it expired. This memo sets out what has actually happened to prices, what was tried here and overseas, what it achieved, and what a government can do about it.

1. What has happened to prices

Inflation in Australia is running at 4.6 per cent in the year to March 2026, the highest reading since September 2023, and 4.2 per cent to April. The Reserve Bank targets 2 to 3 per cent. Underlying inflation, which strips out the most volatile items, is 3.4 per cent. The cash rate has been raised three times in 2026 and stands at 4.35 per cent.

Those are the headline figures. They describe the rate at which prices are still rising. They do not describe what has already happened.

Between 2021 and 2026 the cost base of an Australian household was permanently reset. Groceries sit 25 to 35 per cent above 2021 levels. Housing costs are up 6.3 to 7.2 per cent in the last year alone, on top of the years before it. Insurance premiums are roughly 8 per cent higher than a year ago. Transport is up 6.6 per cent. Electricity, depending on the month measured, is between 25 and 37 per cent higher than twelve months earlier.

The single most important thing to understand about this is the one most often confused. Falling inflation does not mean falling prices. When the rate moves from 6 per cent to 4 per cent, prices are still rising — more slowly, from a higher base. Nothing in the published figures indicates that anything is getting cheaper. The 3.1 per cent food inflation reported in early 2026 is 3.1 per cent applied to prices that had already risen by a quarter to a third.

This is why the official commentary and the household experience have diverged so completely. The commentary describes a rate that is coming under control. The household is looking at a shelf.

2. The inflationary basket

The Consumer Price Index is not a measure of every price in Australia. It is a weighted sample: a basket of goods and services, priced regularly, with each item weighted by how much households collectively spend on it. It is a good instrument, well constructed, and it is the right basis for monetary policy.

It is not a good description of any particular household.

The Australian Bureau of Statistics publishes a second set of figures, the Living Cost Indexes, which measure the same prices against the spending patterns of different household types. In the twelve months to the March 2026 quarter these rose by between 2.6 and 5.2 per cent depending on the household. The same economy, the same prices, and a spread of two and a half percentage points depending on who you are.

The reason is composition. A household that spends a large share of its income on housing, energy, food and health is exposed to precisely the categories that have risen fastest. A household that spends more on discretionary goods, travel and services has been exposed to categories that rose more slowly. The headline number is the average of two very different experiences.

There is a second limitation, and it is structural rather than methodological. A basket is a sample. It is priced periodically, published quarterly and monthly, and revised. By the time a category is confirmed to have moved, it has been moving for some time. The instrument was designed to describe the economy accurately, not to detect a change quickly, and it does the job it was designed for.

What no Australian government currently has is the other instrument: a continuous, product-level view of what things actually cost, updated in something close to real time. That is a solvable problem, and section 11 sets out how.

3. Food and the basics

Food inflation is now reported at around 3 per cent. That figure is accurate and it is misleading, because it describes the current rate of increase on a base that has already moved a long way.

Measured across the inflationary period, the individual staples have risen as follows.

Beyond those, bread, fruit, eggs, oils, snacks and coffee have each risen by more than 20 per cent. Taken together, grocery prices are 25 to 35 per cent above where they sat in 2021, and there is no mechanism in the system by which they return there.

In household terms: the average Australian household now spends about $178 a week on groceries, up from $168 a year earlier and 11 per cent above 2023. A family of four has gone from $216 to $240 a week — $12,480 a year, and close to $3,000 more than the same shop cost in 2021.

The increase is not evenly distributed geographically. Queensland households recorded the largest annual jump at $38 a week, or 22.3 per cent, approaching $2,000 more a year. New South Wales households are spending about $882 more a year than twelve months earlier, and Victorian households about $915.

These are the prices people notice, because they are paid weekly and in person. A mortgage moves once and is felt monthly. A grocery bill is a referendum on the cost of living held every Saturday morning.

4. Shrinkflation

Not every price rise appears as a price rise.

Shrinkflation is the practice of reducing the quantity in a package while holding the price. The shelf price is unchanged, the unit cost rises, and the increase is invisible to a shopper who is not checking the weight against a previous purchase they no longer have.

It was raised directly by consumers with the Australian Competition and Consumer Commission during its supermarket inquiry, and the Commission recorded it as a substantive concern rather than a perception. Because the practice is legal, well documented internationally, and difficult for an individual to detect at the point of sale, it operates as a price rise that avoids the reaction a price rise would normally provoke.

Unit pricing — the requirement to display price per hundred grams or per litre alongside the shelf price — is the existing remedy, and it is a good one. Its weakness is that it shows the current unit price and not the change in it. A shopper can compare two products on the shelf today. They cannot compare today’s package against last year’s.

The point for this memo is narrow and important: a portion of the real increase in the cost of food does not appear in the food inflation figure at all. The published number is a floor, not a ceiling.

5. Rent and housing

Housing is the largest single cost in most household budgets and it has moved further than any other category.

Australian households now spend a record 33.1 per cent of gross pre-tax income on rent. The threshold conventionally used to define rental stress is 30 per cent. The national median has passed it, which means the typical renting household is now in the territory once used to identify households in difficulty.

Beneath the median the position is considerably worse. A household at the twenty-fifth percentile of income, earning about $961 a week, paying a twenty-fifth percentile rent of $521 a week, is spending 54.3 per cent of its income on rent — a record in the series.

And at the sharp end: one in ten Australian renters now spends more than 60 per cent of their income on rent. That figure was 7 per cent in 2023 and 4 per cent in 2022. It has nearly tripled in four years.

The combined capital city median dwelling rent reached $724 a week in March 2026, with regional markets at $612 and Sydney highest at $824. Perth and Brisbane are recording the fastest rent growth in the country at 6.7 per cent annually, with Perth vacancy below 0.8 per cent against a national rate of 1.2 per cent and a balanced market conventionally understood as 2.5 to 3 per cent.

Rents are accelerating again rather than easing: national dwelling rents rose 2.1 per cent in the March 2026 quarter, up from 1.2 per cent the quarter before.

The cause is not complicated. Australia is building 160,000 to 170,000 dwellings a year against demand estimated above 240,000 — a shortfall of 70,000 to 80,000 dwellings annually, compounding. Household sizes are falling, which means the same population requires more dwellings each year. Only 14 per cent of median-income households can afford the national median home.

The option that does not exist

Between a mortgage and a rental queue there is nothing.

There is no cheap, small, decent place to start. The consequence is visible in every one of the figures above and in several that are not: people sleeping in cars, students commuting two hours or abandoning study, people in their thirties in a childhood bedroom, a single income with no entry point at all.

Sovereign Australia proposes two forms of housing that would provide one, and neither requires a subsidy.

Community Towns place privately owned moveable dwellings on shared rural land, with communal buildings and continuing agriculture on the site. The resident owns the dwelling and leases the site, so the cost of land is not carried in the purchase price. City Communities convert commercial buildings — floors already built, already serviced, in many cases already empty — into a private lockable room with kitchens, bathrooms, laundries and work space shared on each floor, under one operator and one set of house rules. It is the arrangement purpose-built student accommodation already uses, opened to everyone.

Both work on the same principle. Sharing reduces cost. One kitchen, one laundry, one workshop serving many households instead of one of each per household. The most expensive components of a dwelling are paid for once and used by many. And where there is land, food grown on it is food that never had a price.

Neither is a model for everyone, and neither should be presented as one. They are options for households the market has priced out entirely, built by communities working together. Both are currently illegal to build at any scale, because state planning instruments contain no zone that permits them. That is a state decision, and it is the whole obstacle.

6. Basic inputs — electricity, energy and fuel

Energy is not one cost among many. It is an input to every other cost. It runs the dairy, the cold chain, the freight, the supermarket refrigeration and the pump. A rise in the price of energy arrives later as a rise in the price of food, and later again as a rise in the price of services.

Electricity prices rose 25.4 per cent in the year to March 2026, 37 per cent in the year to February, and 33.9 per cent in the year to September 2025.

The reason those figures are so large deserves to be stated precisely, because it is the most important single mechanism in this memo.

What the rebates actually did

From July 2023, Commonwealth and state energy rebates reduced the electricity bills of eligible households. The rebates worked, in the narrow sense that bills were lower than they would otherwise have been. The Australian Bureau of Statistics said so at the time, in terms that are worth quoting exactly.

In November 2023 the ABS reported that electricity prices had risen 8.8 per cent since June 2023, and added: “Excluding the rebates, Electricity prices would have increased 19.0 per cent over this period.”

The underlying price had risen 19 per cent. The published price had risen 8.8 per cent. The difference was public money, and it did not reduce the cost of generating or delivering a unit of electricity by a single cent. It moved who paid for it.

Then the rebates were exhausted. The published price rose to meet the underlying price, and the increase arrived all at once: 33.9 per cent in the year to September 2025 as state rebates ran out, and 25.4 per cent to March 2026.

The rebates did not lower the price of electricity. They concealed it, and then handed it back.

This is not a criticism unique to Australia, and section 8 shows the identical pattern in Europe using a different instrument. It is a general property of relief that operates on the price rather than on the cost.

7. Who it hit hardest

The Living Cost Indexes show the spread. Over the twelve months to the March 2026 quarter, different household types recorded increases between 2.6 and 5.2 per cent.

Government payment recipient and age pensioner households recorded among the largest increases, for two compounding reasons. First, they have smaller electricity bills in absolute terms, which means changes in rebates or prices have a proportionally larger effect on their out-of-pocket cost. Second, their health costs rise every January, when the Pharmaceutical Benefits Scheme and Medicare Safety Net thresholds reset and the proportion of households qualifying for subsidy falls until the thresholds are reached again.

Renters are more exposed than mortgage holders on the current numbers. Mortgage interest charges fell 6.3 per cent over the twelve months to the March 2026 quarter, while rents rose and rental stress reached record levels. Around a third of Australian households rent, and renter households tend to be younger, on lower incomes, and holding less wealth.

The general shape is consistent and unsurprising: the categories that rose fastest — housing, energy, food, health and insurance — are the categories that occupy the largest share of a low-income budget. Inflation is not distributed evenly, and a single national figure conceals that by construction.

8. What government has offered, and what it cost

Australian governments responded to the cost-of-living increase substantially through transfers: energy bill relief, tax cuts, and targeted payments. The response was neither trivial nor cynical. It was the fastest available instrument, and it reached people who needed it.

It also had two properties worth stating plainly.

It was borrowed. Relief funded from deficit adds cash to the economy, and cash added to the economy is inflationary. The relief therefore made the Reserve Bank’s task harder at the same time as it eased the household’s position, and the Bank responded to the aggregate by raising the cash rate on everybody.

And it operated on the price rather than the cost, which meant it expired. Section 6 sets out what happened when it did.

The same experiment was run across Europe on a larger scale and with more instruments, and the results are consistent enough to be treated as evidence rather than anecdote.

Price caps

Hungary capped the retail price of food and fuel. It now has the highest food inflation in the European Union, with prices approximately doubling since 2020.

Croatia introduced official price ceilings on 30 basic food and hygiene products in 2023, cut VAT on those items to 5 per cent, required shelf labelling, and required that where a capped product was out of stock a similar capped product be offered. The list was expanded to 70 products by early 2025 and to 100 by November 2025.

A capped list that has to be expanded three times is not a solved problem. A cap holds a published price while doing nothing to the cost beneath it, and the gap between the two has to be absorbed by someone — a supplier, a retailer, or eventually the shelf, when the product simply stops being stocked.

VAT reductions

At least 21 countries cut value added tax on food between 2020 and 2023. The research on the results is not encouraging. VAT cuts are not fully passed through to consumers. The effect dissipates quickly. And when the cut is reversed, prices frequently rise to a higher level than before it was introduced — an effect the literature calls reverse pass-through.

Spain cut VAT on basic foodstuffs and added a €200 payment for vulnerable families. Its food CPI still stood at 16.6 per cent in February 2023, having accumulated a 17.5 per cent increase over the year, above neighbouring countries.

Portugal introduced a 33 per cent windfall tax on the extraordinary profits of the food distribution sector and energy companies, alongside payments of €125 per person and €50 per child for lower incomes. The average price of essential foods in Portugal rose almost 30 per cent from the start of 2022, with the reference food basket moving from €74.90 to €96.44.

The one that is different

Greece did something structurally distinct. Rather than capping a price, it required availability. Every supermarket chain with turnover above €90 million must offer one product in each of 31 categories — bread, milk, pasta, rice, meat and others — at a discounted price, and must advertise it publicly. Failure carries a fine of €5,000 for every day of delay.

The Greek measure does not tell any retailer what anything costs. It guarantees that an affordable option exists in every category, in every store, visibly. It works with the market rather than against it, and it is enforceable.

Of everything attempted in Europe, this is the model most worth examining, because it is the only one that does not expire, does not require continuing expenditure, and does not create a gap between a published price and a real cost.

9. What was recommended and not done

The Australian Competition and Consumer Commission conducted an inquiry into supermarket pricing and delivered a final report containing 20 recommendations, covering pricing transparency, the treatment of suppliers, and market conduct.

One of those recommendations is directly relevant to everything in this memo.

The ACCC recommended that the Australian Government require “very large supermarket chains (by turnover) to make application programming interfaces available, which provide dynamic price information for third parties”.

In plain terms: require the major chains to publish their prices in a machine-readable form, continuously, so that anyone — a researcher, a journalist, a comparison service, a household — could see what things actually cost and how that changed.

It was not implemented.

The cost to the public of implementing it would have been close to nothing. The chains already hold the data; it is what their own systems run on. It requires no subsidy, no cap, no expenditure, and no ongoing programme. It is the cheapest instrument on the list, and it is the one that was not used.

Shrinkflation was also raised in the inquiry, and remains without a specific remedy.

Across the European Union, the finding was the same. An analysis of national policy responses found no clear steps taken to address margins outside the energy sector, and concluded that monitoring mechanisms remain inadequate. Governments capped, subsidised, taxed and exhorted. Almost none of them measured.

10. Competition

Two chains hold more than 65 per cent of the Australian grocery market. That concentration is the usual subject of competition discussion, and it is the visible end of the chain. The more consequential concentration has been happening further upstream, and one case documents it completely.

Longwarry

In 2025, Lactalis — a French-owned multinational, already Australia’s largest dairy processor and the maker of Pauls, Oak and Ice Break — acquired Fonterra’s Australian assets for $3.4 billion.

During the ACCC’s assessment of that acquisition, Australian Dairy Farmers raised concerns about increasing consolidation across the dairy industry and the importance of maintaining strong competition and regional processing facilities.

The acquisition proceeded.

It left the combined company with a surplus of manufacturing capacity in Victoria and insufficient raw milk to run all of its sites efficiently. In July 2026, Lactalis announced the closure of its Longwarry plant in West Gippsland, phased from late 2026 with complete shutdown scheduled for the first quarter of 2027. The site, which produces milk powders and specialty dairy ingredients, had been running at approximately 40 per cent capacity.

Longwarry employs about 50 people in a town of roughly 4,000 — around 7.5 per cent of the local workforce at the last census.

It is not an isolated decision. Lactalis closed its Rockhampton plant in 2025 with the loss of 47 jobs, and is closing its South Brisbane plant — Queensland’s largest and oldest milk factory, employing 202 people — in July 2026. The company has committed more than $200 million in capital expenditure to concentrate production in fewer, larger sites.

The president of Australian Dairy Farmers, responding to the Longwarry announcement, said: “Every factory that closes undermines dairy communities and makes the industry that little bit smaller.”

What happened to the margin

Over the same period, in the same region, the numbers on both ends of the chain moved in opposite directions.

Gippsland has approximately 917 dairy farm businesses producing 1.93 billion litres of milk — 36.7 per cent of Victoria’s production and 23.2 per cent of Australia’s. In 2024–25, the average milk price paid to those farmers fell 10 per cent to $8.41 per kilogram of milk solids, while feed costs rose 11 per cent and overheads rose 3 per cent. Only 19 of the 25 monitored farms — 76 per cent — recorded a positive return.

Over the same period, retail cheese rose 27.3 per cent and retail milk rose 22.7 per cent.

The farmer was paid less. The shopper was charged more. And the layer in between bought its largest competitor.

Where the monitoring is not

Australia does monitor supermarket prices. That monitoring watches the shelf.

Nothing watches the processing layer, which is where this consolidation occurred and where the margin moved. Monitoring the till does not help when the plant closed upstream.

What should have been available

Three instruments would have changed this outcome, and none of them requires a price to be controlled.

A last-resort sale obligation. A viable processing facility of regional or national significance should not simply be closed. It should be offered for sale at independent valuation, for a defined marketing period, before closure is permitted. A plant running at 40 per cent capacity for one owner may be viable at 90 per cent for another.

Enforceable conditions that survive the merger. The ACCC can accept undertakings when it approves an acquisition. The failure in this case is that capacity and continuity commitments either were not sought or did not bind. Approvals of acquisitions in critical food processing should carry enforceable capacity conditions for a fixed term.

A national interest test for food processing capacity. Australia already applies such a test to critical infrastructure and to foreign investment in sensitive sectors. The plants that turn Australian produce into Australian food are not obviously less important than the assets already covered.

11. Inflation monitoring

Every instrument in the previous three sections shares a dependency. Capping a price, supporting a producer, challenging a margin or acting on a specific input all require knowing, early and precisely, which price has moved and where in the chain it moved.

Australia currently cannot do that.

The Consumer Price Index is a sample, published periodically. It is accurate and it is retrospective. By the time a category is confirmed to have risen, it has been rising for months, and the opportunity to act on the cause rather than the consequence has passed.

Sovereign Australia proposes a continuous product-level price monitor: an AI system tracking approximately one million products from farm gate to shelf, in something close to real time.

The distinction from the CPI is not a criticism of the CPI. A basket is a sample. A million products is a census. They answer different questions. The sample answers “what is the general price level doing”, which is the question monetary policy needs answered. The census answers “what has just moved, by how much, and at which point in the supply chain”, which is the question a government needs answered before it can act on anything specific.

Three things follow from having it.

The margin becomes visible. The Gippsland case in section 10 — farmgate price down 10 per cent, retail dairy up 22 to 27 per cent — was reconstructed after the fact from separate datasets published by different bodies at different times. A farmgate-to-shelf monitor would have shown it moving while it was moving.

Action becomes possible in weeks rather than years. A price signal that arrives in days can be acted on before it propagates. A price signal that arrives in a quarterly release can only be responded to after the fact, and by then the only instrument with any reach is the cash rate.

Shrinkflation becomes measurable. A system tracking unit price by product over time detects a package reduction automatically. A shopper cannot.

This sits within the Department of Australian Automation, alongside the other public data functions, and its output is published rather than held. The information is not the government’s: it is a description of what Australians are being charged, and there is no reason for any part of it to be confidential.

The ACCC recommended a version of this, in the form of mandatory price APIs from the major chains, and it was not implemented. That recommendation is the starting point and not the end of it, because it covers the shelf and not the chain.

12. Productivity, income and the supply side

Everything to this point concerns prices. This section concerns the other half of the equation, and it is the half that decides the outcome.

Australia’s multifactor productivity — the measure of how efficiently labour and capital combine to produce output — fell 0.5 per cent in 2024–25. The twenty-year average is growth of 0.4 per cent a year. The average across the reform decade from 1994–95 to 2003–04 was 1.6 per cent a year. Average productivity growth in the 2010s was the lowest in sixty years.

The Treasury has downgraded its long-run productivity assumptions accordingly, with the consequence that Australian incomes will be approximately 20 per cent lower in forty years than they would have been on the previous trajectory.

Within that national decline there is one exception, and it is the most important fact in this memo.

Agriculture, forestry and fishing led every industry in Australia with multifactor productivity growth of 10.4 per cent over the year.

The farms got approximately ten per cent more efficient in a single year. Food still costs 25 to 35 per cent more than it did in 2021. The problem is not the farm. It is everything between the farm gate and the shelf: processing concentrated into fewer hands, energy as an input, freight, and no visibility of margin at any point in the chain.

What competition is worth

Treasury and Reserve Bank research has found that lifting competition back to the level of the early 2000s could raise GDP by 1 to 3 per cent — $2,000 to $6,000 per household.

That figure deserves to be held against the alternatives. Energy rebates were worth a few hundred dollars, once, and were borrowed. Competition reform is worth thousands, permanently, and costs the budget nothing.

Why it matters more than any price measure

Prices do not return to a previous level. Nothing in the structure of an economy pulls them back. Groceries at 30 per cent above 2021 are the new base, and every future increase compounds on it.

Which leaves one durable answer. Incomes have to rise faster than prices. That requires productivity, and productivity requires investment, competition, skills and work worth doing. Around a third of labour productivity growth and 40 per cent of multifactor productivity growth over the past three decades came from improvements in the workforce’s skills — and one in five adult Australians currently has low literacy or numeracy, with education below Year 12 now the most common barrier to work for jobseekers.

Every other measure in this memo buys time. This is the only one that ends the problem.

13. Two hands on the wheel

Australia has one instrument in active use against inflation: the cash rate, held by the Reserve Bank, which has a mandate to keep inflation between 2 and 3 per cent and is discharging it.

This memo makes no criticism of the Reserve Bank and proposes no change to its independence. The Bank is doing its job with the tool it has. The difficulty is that it has been left to do the job alone.

The cash rate is the correct instrument for general inflation. It has two transmission channels and both matter here.

The exchange rate. A higher cash rate lifts the Australian dollar, which makes imports cheaper and pulls imported inflation down. Australia imports fuel, fertiliser, machinery and most manufactured goods, so this channel is real and comparatively fast. It also cuts the other way: the Australian dollar rose from US$0.64 in April 2025 to US$0.71 a year later, weakening export competitiveness, and is forecast to strengthen further driven by cash rate rises. That was reported as a pressure on the dairy industry in the same period as the closures described in section 10. The instrument that shields the shopper from import prices simultaneously squeezes the farmers, miners and processors who earn the national income.

The money supply. Cash added to the economy is inflationary. Which means an untargeted rebate is inflationary twice over: it adds cash, and it conceals the price signal that would otherwise moderate demand. The relief packages of 2023 to 2025 made the Bank’s task harder, and the Bank responded by raising the rate on every borrower in the country.

What the cash rate cannot do is distinguish. It cannot tell an egg price from a rent. It works only by suppressing demand, and it acts with a lag of a year or more.

Consider what it was asked to do in 2026. The Reserve Bank raised three times, to 4.35 per cent, while electricity rose between 25 and 37 per cent and rent reached a record share of household income. No rate rise could touch either cause, because neither was a demand problem. Electricity rose because a subsidy expired. Rent rose because 70,000 to 80,000 dwellings a year are not being built. Those are supply, input-cost and market-structure problems, and they belong to the elected government.

The position is therefore simple. Two hands on the wheel: the Reserve Bank manages the aggregate, and government acts on the specific. Every price a government fixes at its source is a rate rise the whole country does not need.

14. What a government can do

The instruments available fall into three groups, and the evidence assembled in this memo indicates a clear order of preference between them.

Structural — changes the cost

Supply: the dwellings that are not being built, and the planning instruments that prevent cheaper forms of housing from existing at all. Energy: the price of the input that prices everything else. Competition: worth $2,000 to $6,000 per household on Treasury’s own estimate. Processing capacity: kept open rather than consolidated away. Productivity and skills.

These are slow and they are permanent. They change what something costs to produce, so the lower price survives without continuing support.

Fiscal — changes what a household keeps

Tax paid, and support to producers where an input cost has moved. Support directed at a producer’s costs reduces the cost of making the thing, and therefore reaches the shelf. Support directed at a consumer’s price conceals the cost and expires, as section 6 demonstrates.

Untargeted transfers add cash to the economy and are inflationary. Targeted cost reduction is not, and this distinction should govern the design of any relief.

Legislated — changes what is visible and what is permitted

Mandatory price transparency. Merger conditions that bind. Divestiture powers. A last-resort sale obligation on critical processing capacity. Unit pricing extended to show change over time. And, on the Greek model, a requirement that an affordable option exist in each staple category rather than a cap on what anything costs.

These are the cheapest instruments available and Australia has used the fewest of them.

The order of intervention

When a staple rises, the sequence should be: reduce the cost, reveal the price, increase the competition — and only then, and only on staples, control anything.

The evidence for that ordering is set out in section 8. Hungary capped and produced the highest food inflation in the European Union. Croatia has expanded its capped list three times. A control suppresses a published number while leaving the cost beneath it untouched, so the price waits for the control to lift.

Subsidise a price and you hide it. Reduce a cost and you change it.

15. What Sovereign Australia will do

The cost of living is the first order of business of a Sovereign Australia government. Not a chapter of a budget and not a relief package — the standard against which every other policy is measured, on one question: does it leave a household better off.

Ten steps.

1. Make it the first order of business. Cost of living is the priority of government, and every other policy is measured against whether it makes a household better off.
2. Lower taxes. Australians keep more of what they earn. The fastest way to raise what a household has is to stop taking it in the first place.
3. Bring energy down. Power prices everything else — food, freight, rent, every service. Cheap energy is a grocery policy.
4. Restore competition. Two chains hold two-thirds of the groceries and one company now owns most of the milk. Concentration is not efficiency. It is the power to set a price.
5. Keep capacity open. A working plant gets sold, not shut. A processor that buys its rival keeps the doors open, or does not get the approval.
6. Share what can be shared. An option for people the market has priced out, not a model for everyone. One kitchen, one laundry, one workshop serving many instead of one each. Own the dwelling, lease the land. Communities working together, so costs fall because less is duplicated — not because someone else pays.
7. Grow food where people live. Food forests, community gardens, working land inside the settlement. Every meal grown is a meal that never had a price.
8. See the prices. Measure what things actually cost, in real time, from the farm gate to the shelf. You cannot fix what you cannot see.
9. Act on what moved. When a staple rises, act on that thing quickly rather than waiting a year for a statistic and then raising every mortgage in the country. Start where the cost starts: if eggs are dear, help the farmer with what made them dear — feed, power, fuel, freight — because a cost removed at the farm reaches the shelf. Price controls are the last option, not the first, and only on staples.
10. Grow what Australians earn. Prices do not go back down. Incomes have to rise faster than they rise — productivity, industry, and work worth doing.

Two of these are different from the others, and the difference should be stated rather than left to be noticed.

Steps 1 through 5, and 8 through 10, act on prices. They slow an increase, reveal a margin, restore a competitor, or raise an income against a cost. All of them are worth doing and none of them changes what a household needs to spend.

Steps 6 and 7 do. A household that shares a kitchen, a laundry and a workshop, owns its dwelling and leases its land, and grows some part of its own food has a structurally lower cost of living — permanently, with no transfer payment, and no dependence on any price staying where it is. Most cost-of-living policy tinkers with prices. Only this changes the bill.

The principle underneath all ten is one sentence. The job of government is not to hand back a fraction of what it let get away. It is to stop the price getting away in the first place.

16. Summary

Prices in Australia have been permanently reset. Groceries sit 25 to 35 per cent above 2021, with cheese up 27.3 per cent, bread 24.1, milk 22.7 and eggs 19.7. A family of four pays close to $3,000 a year more for the same shop. Electricity has risen between 25 and 37 per cent depending on the month measured. Renting households now pay a record 33.1 per cent of gross income, one in ten renters pays more than 60 per cent, and Perth has the fastest rent growth in the country.

Relief was offered and it was real, but it operated on the price rather than the cost. The Australian Bureau of Statistics recorded that without the energy rebates electricity would have risen 19.0 per cent rather than 8.8. When the rebates expired the published price rose to meet the real one. The same pattern appears across Europe with a different instrument: at least 21 countries cut food VAT, and prices frequently rose higher than before once the cuts were reversed. Hungary capped prices outright and has the highest food inflation in the European Union.

The cheapest instrument available was not used. The ACCC recommended requiring the major chains to publish live price data for third parties. It was not implemented, and across the European Union no government took meaningful action on margins outside energy either. Governments capped, subsidised and exhorted. Almost none of them measured.

Meanwhile Australian agriculture recorded 10.4 per cent productivity growth, leading every industry in the country, while national multifactor productivity fell 0.5 per cent. The farms are not the problem. The chain between them and the shelf is, and one company acquiring another for $3.4 billion has closed three processing plants since — including one in a Gippsland town where it employed 7.5 per cent of the workforce, after farmers had formally warned the regulator that exactly this would follow.

Australia has fought this with one instrument. The Reserve Bank has raised the cash rate three times in 2026 while electricity rose 37 per cent and rent hit a record share of income, and no rate rise could touch either cause because neither was a demand problem. The Bank is doing its half. Government has not been doing its own.

Sovereign Australia will lower taxes, bring energy down, restore competition, keep processing capacity open, make prices visible in real time, act on the specific input that moved rather than on every mortgage in the country, and grow what Australians earn. And it will make legal the two things that change what a household needs to spend at all: housing where what can be shared is shared, and land where food can be grown by the people who eat it.

Prices do not come back down on their own. Everything else buys time.

17. Sources

1. Australian Bureau of Statistics, Consumer Price Index, Australia and Monthly CPI indicator (releases to April 2026) — annual CPI of 4.6 per cent to March 2026 and 4.2 per cent to April, the highest readings since September 2023; trimmed mean 3.4 per cent; housing 6.3 to 7.2 per cent; rents 3.8 per cent; food 2.8 to 3.1 per cent; transport 6.6 per cent; and electricity rising 33.9 per cent in the year to September 2025, 37 per cent to February 2026 and 25.4 per cent to March 2026 as government rebates were exhausted; sections 1, 3, 6 and 7.
2. Australian Bureau of Statistics, media release Monthly CPI indicator rose 4.3% annually to November 2023 — electricity prices had risen 8.8 per cent since June 2023, and “excluding the rebates, Electricity prices would have increased 19.0 per cent over this period”; section 6.
3. Australian Bureau of Statistics, Selected Living Cost Indexes, Australia, March 2026 — Living Cost Indexes rising between 2.6 and 5.2 per cent in the twelve months to the March 2026 quarter; housing, health and transport as the main contributors; mortgage interest charges falling 6.3 per cent over the year; the disproportionate effect of electricity rebate changes on households with smaller bills; and the January reset of Pharmaceutical Benefits Scheme and Medicare Safety Net thresholds; sections 2 and 7.
4. Australian Human Rights Institute, UNSW, The price is not right: how increasing grocery prices impact food security in Australia — cheese up 27.3 per cent, bread 24.1 per cent, milk 22.7 per cent, dairy products 22.5 per cent and eggs 19.7 per cent; and Woolworths and Coles accounting for more than 65 per cent of the market; sections 3 and 10.
5. Canstar Blue supermarket shopper survey (2025) and Compare the Market state analysis — average household grocery spending of $178 a week, up from $168 a year earlier and 11 per cent above 2023; a family of four moving from $216 to $240 a week, or $12,480 a year and close to $3,000 more than 2021; Queensland up $38 a week or 22.3 per cent, New South Wales $882 a year and Victoria $915; section 3.
6. Australian Competition and Consumer Commission, Supermarkets Inquiry final report (2025) — 20 recommendations covering pricing transparency, supplier treatment and market conduct, including the recommendation that very large supermarket chains by turnover be required to make application programming interfaces available providing dynamic price information for third parties; and the recording of shrinkflation as a substantive consumer concern; sections 4, 9 and 11.
7. Cotality, Quarterly Rental Review (Q1 2026) — a record 33.1 per cent of gross household income spent on rent nationally; combined capitals median dwelling rent of $724 a week and regional markets at $612, with Sydney at $824; Perth and Brisbane recording the fastest rent growth at 6.7 per cent annually; and national dwelling rents rising 2.1 per cent over the three months to March 2026, up from 1.2 per cent in the previous quarter; section 5.
8. Australian Institute of Health and Welfare, Housing affordability — a household at the twenty-fifth income percentile earning about $961 a week and paying a twenty-fifth percentile rent of $521 a week allocating 54.3 per cent of income to rent, a series record; and one in ten renters spending more than 60 per cent of income on rent, up from 7 per cent in 2023 and 4 per cent in 2022; section 5.
9. PropTrack housing affordability analysis and national vacancy data (February 2026) — a national residential vacancy rate of approximately 1.2 per cent against a balanced market of 2.5 to 3 per cent, Perth and Brisbane below 0.8 per cent and Adelaide at 0.5 per cent; construction of 160,000 to 170,000 dwellings a year against demand above 240,000, a shortfall of 70,000 to 80,000 annually; and only 14 per cent of median-income households able to afford the national median home; section 5.
10. Reserve Bank of Australia, Renters, Rent Inflation and Renter Stress, Bulletin (March 2023) — approximately one third of Australian households renting, and renter households tending to be younger, on lower incomes and holding less wealth than owner-occupiers; section 7.
11. Investigate Europe, Inflation, prices and greedflation in Europe (2024) — VAT reductions in Poland, Italy and Portugal; fuel price caps in Hungary, rebates in Germany and Spain and VAT cuts in Italy and Poland; Hungary recording the highest food inflation in Europe with prices almost doubling since 2020; energy subsidies structured so that households received relief while businesses paid full prices above a consumption threshold; and the finding that no clear steps were taken to address margins outside the energy sector, with monitoring mechanisms remaining inadequate; sections 8 and 9.
12. Central European Times, Caps and ceilings: fighting inflation with price regulation (January 2026) — Croatia introducing official price ceilings on 30 basic food and hygiene products from 2023, expanding to 70 by early 2025 and 100 by November 2025, with VAT on capped items reduced to 5 per cent, mandatory shelf labelling and a requirement to offer a similar capped product where one is out of stock; section 8.
13. Matthews, A., Food price situation in Europe — the Greek household basket requiring supermarkets with turnover above €90 million to offer one product in each of 31 categories at a discounted price and advertise it, with a fine of €5,000 per day of delay, in effect from 2 November 2022; and Portugal’s 33 per cent windfall tax on the extraordinary profits of energy companies and major food retailers; section 8.
14. Asquith, B. and others, Fighting inflation through VAT reductions, Food Policy (2025), citing Kosonen (2015) and Benzarti and others (2020) — at least 21 countries enacting temporary VAT reductions on food between 2020 and 2023; incomplete pass-through to consumer prices; effects dissipating quickly; and prices often rising to higher levels than before the reduction upon its reversal; with interventions most effective when combined with competition enforcement and monitoring of both implementation and reversal; section 8.
15. El Mundo and Hungary Today, Price caps on food products (March 2023) — Spain reducing VAT on basic foodstuffs and providing a €200 payment for vulnerable families while food CPI stood at 16.6 per cent in February 2023, having accumulated 17.5 per cent over the year; Portugal’s payments of €125 per person and €50 per child below an income threshold; Italy’s fund for incomes under €15,000 and shopping basket savings cards; and Greece’s aid of 10 per cent of food expenditure up to €220; section 8.
16. Ministry of Agriculture, Portugal, Responses to the cost-of-living crisis (November 2023) — the average price of essential foods in Portugal rising almost 30 per cent since 2022, with the reference food basket moving from €74.90 at the start of 2022 to €96.44; section 8.
17. Australian Dairy Farmers, statement on the Longwarry closure (July 2026) — concerns raised during the ACCC’s assessment of the Lactalis acquisition of Fonterra about increasing consolidation, the importance of maintaining strong competition and regional processing facilities, and the statement that “every factory that closes undermines dairy communities and makes the industry that little bit smaller”; section 10.
18. Lactalis Australia company statements and reporting in Food Processing, FoodBev Media and The Epoch Times (January to July 2026) — the $3.4 billion acquisition of Fonterra’s Australian assets in 2025 leaving surplus manufacturing capacity and insufficient raw milk; the closure of the Longwarry plant in West Gippsland phased from late 2026 with complete shutdown in the first quarter of 2027, affecting approximately 50 employees in a town of about 4,000, or 7.5 per cent of the local workforce, at approximately 40 per cent capacity utilisation; the closure of the Rockhampton plant with 47 job losses; the closure of the South Brisbane plant affecting 202 employees in July 2026; and more than $200 million in committed capital expenditure to consolidate production; section 10.
19. Agriculture Victoria, Dairy Farm Monitor Project: Gippsland 2024–25 — approximately 917 dairy farm businesses producing 1.93 billion litres, being 36.7 per cent of Victorian and 23.2 per cent of Australian milk production; average milk price falling 10 per cent to $8.41 per kilogram of milk solids; feed costs rising 11 per cent to $4.21 and overheads 3 per cent to $3.03; and only 19 of 25 participants recording a positive return; section 10.
20. Productivity Commission, Annual productivity bulletin 2026 — multifactor productivity declining 0.5 per cent in 2024–25 against a twenty-year average of 0.4 per cent growth a year and annual average increases of 1.6 per cent between 1994–95 and 2003–04; and agriculture, forestry and fishing leading all industries with multifactor productivity growth of 10.4 per cent over the year; section 12.
21. Australian Treasury, Economic Reform Roundtable: productivity overview (August 2025) — average productivity growth in the 2010s at the lowest rate in 60 years; the downgrading of long-run labour productivity assumptions; Treasury and Reserve Bank research finding that lifting competition to a level similar to the early 2000s could raise GDP by 1 to 3 per cent, or $2,000 to $6,000 per household; around one third of labour productivity growth and 40 per cent of multifactor productivity growth over three decades being driven by workforce skills; and around one in five adult Australians having low literacy or numeracy, with education below Year 12 the most common barrier to work for jobseekers; section 12.
22. The Epoch Times, reporting on Australian dairy conditions (July 2026) — the Australian dollar rising from US$0.64 in April 2025 to US$0.71 a year later, weakening export competitiveness, with further strengthening forecast driven by cash rate rises; Dairy Australia projecting national production to fall 2 per cent in 2026–27; and restricted milk pools, high energy costs and surplus drying capacity across the industry; sections 10 and 13.
23. Sovereign Australia, The Australian New Deal federal platform, and the party’s published policies on power, the Resource Extraction Levy, cost of living, Community Towns and City Communities; and Memos 6, 7 and 8; sections 5, 6, 11, 14 and 15.