New data from the Australian Bureau of Statistics (ABS) shows that Australians’ overall life satisfaction has fallen below the level recorded during COVID-19 lockdowns, highlighting the growing impact of rising living costs and economic pressures on people’s wellbeing.
According to the data, Australians rated their average life satisfaction at 7.2 out of 10 during the height of the pandemic in 2020. By 2025, that figure had fallen slightly to 7.1. While the difference appears small, researchers noted that life satisfaction is now lower than it was during one of the most restrictive periods in recent history, making the trend noteworthy.
KPMG urban economist Terry Rawnsley said that although the pandemic brought significant uncertainty, Australia had not yet experienced the severe cost-of-living pressures seen today. In recent years, real wage growth has failed to keep pace with inflation, while household wealth and per-capita spending have largely stagnated, placing increasing financial strain on many families.
The survey, which covered more than 13,000 households, found that over one in five households would be unable to raise A$2,000 within a week to cover an unexpected expense, a higher proportion than in 2019. More than a quarter of households also reported experiencing cash-flow difficulties, forcing them to draw on savings or take on additional debt.
Psychologist Sue Read said that although the pandemic was challenging, many people felt a sense of collective solidarity and shared purpose. Government financial support also helped reassure the public that the crisis would eventually come to an end. By contrast, today’s financial pressures are more persistent, unpredictable, and difficult to escape, creating a different kind of long-term stress.
Retailers have also observed changes in consumer behaviour. Some report that customers are increasingly purchasing inexpensive items that provide small moments of happiness, using simple purchases as a way to relieve stress.
Commentary
It may seem surprising that Australians are now less satisfied with life than they were during the pandemic. However, the findings suggest that the prolonged cost-of-living crisis may be harder for many people to endure than temporary lockdowns and social restrictions.
For younger Australians, rising living costs are only part of the challenge. Many are also facing uncertainty caused by changes in the labour market, the rapid development of artificial intelligence, and increasing barriers to home ownership. When people feel uncertain about their future, economic growth alone may not be enough to improve their quality of life.
The survey serves as a reminder that social progress should not be measured solely by economic growth or investment figures. Policymakers must also pay attention to people’s quality of life, financial security, and sense of hope for the future. Only when people feel economically secure and optimistic about what lies ahead can overall wellbeing genuinely improve.