Australia has an especially bad inflation problem. So why are we only middle-of-the pack on the misery index?
News Source
•Wed, 04 Nov 2026 14:00:37 GMT
📰 What Happened
Australia's inflation is running hotter than almost anywhere else in the developed world. Consumer prices rose 4.3% in the year to September. The Reserve Bank answered with its fifth rate hike of 2026, lifting the cash rate to 4.85%.
One crude way to compare pain is the misery index, which adds inflation and unemployment together. On inflation alone Australia sits near the bottom. Add jobs and it moves to the middle of the pack, because unemployment has stayed low while New Zealand, Canada and parts of Europe struggled more.
🔍 The Backstory
The misery index was invented by American economist Arthur Okun in the 1970s. It became famous when it was used as a political weapon in the 1976 US presidential campaign. The idea is simple: one number that tries to capture how households feel.
Economists say the index is rough. It ignores wages, housing costs and how the pain is shared. But it does show Australia's trade-off: worse prices, better jobs. The RBA argues the rate rises are needed to stop inflation bedding in.
🎯 Why It Matters
Your mortgage payment just went up again, so a global ranking may feel meaningless. But it helps explain why the RBA keeps raising rates while jobs stay strong.
Australia's inflation is running hotter than almost anywhere else in the developed world. Consumer prices rose 4.3% in the year to September. The Reserve Bank answered with its fifth rate hike of 2026, lifting the cash rate to 4.85%.
One crude way to compare pain is the misery index, which adds inflation and unemployment together. On inflation alone Australia sits near the bottom. Add jobs and it moves to the middle of the pack, because unemployment has stayed low while New Zealand, Canada and parts of Europe struggled more.
The misery index was invented by American economist Arthur Okun in the 1970s. It became famous when it was used as a political weapon in the 1976 US presidential campaign. The idea is simple: one number that tries to capture how households feel.
Economists say the index is rough. It ignores wages, housing costs and how the pain is shared. But it does show Australia's trade-off: worse prices, better jobs. The RBA argues the rate rises are needed to stop inflation bedding in.
Your mortgage payment just went up again, so a global ranking may feel meaningless. But it helps explain why the RBA keeps raising rates while jobs stay strong.