It may be a cost-of-living Christmas but there’s hope for 2026

Australian households are still reporting budget crunches ahead of Christmas 2025, despite headline inflation – one of the major contributors to the cost-of-living crisis – declining significantly in the last three years.

As we head into the festive period, many families will be watching their wallets closely as they seek to strike a balance between saving for the essentials and increased holiday spending. But what has led us here?

The movers and shakers of 2025

Annual inflation in Australia reached a high of nearly 8 per cent in late 2022, driven by a combination of global supply disruptions, strong demand and rapid increases in housing-related costs.

By mid‑2025, that rate had dropped to a little above 2 per cent, well within the Reserve Bank...