What Is the Basket of Goods? How It Affects Australians in 2025

Ever wondered how the Australian Bureau of Statistics (ABS) calculates inflation or why your grocery bill seems to rise each year? It all comes back to the ‘basket of goods’ — a foundational concept that affects everything from wages to welfare payments. In 2025, with living costs and spending habits evolving, understanding the basket of goods is more important than ever.

What Is a ‘Basket of Goods’?

The ‘basket of goods’ is a carefully curated collection of products and services that represents the typical spending habits of Australian households. It’s the shopping list the ABS uses to track price changes over time and calculate the Consumer Price Index (CPI). This isn’t just about groceries — it covers everything from rent and petrol to streaming subscriptions and school fees.

Every few years, the ABS updates the basket to reflect new trends and technologies. In 2025, for example, plant-based foods, wearable tech, and on-demand fitness classes are more prominent than ever, while landline phones and DVDs have faded from the list. The goal: ensure the basket mirrors real-world Australian living.

• Food and non-alcoholic beverages: Fresh produce, pantry staples, takeaway meals

• Housing: Rent, mortgage interest, council rates

• Transport: Fuel, public transport, car maintenance

• Health: GP visits, prescription medicines, dental care

• Recreation and culture: Streaming services, sports club memberships, holiday travel

Why Does the Basket Change in 2025?

The basket isn’t set in stone. Each update reflects the way Australians actually live and spend. In 2025, the ABS has made several notable changes:

• Eco-conscious choices: Plant-based proteins, reusable home goods, and e-vehicle charging fees are now tracked.

• Digital lifestyle: Online subscriptions and digital learning platforms get more weight, reflecting our increasingly online lives.

• Health and wellness: With Australians spending more on gym memberships, mental health services, and wellness apps, these categories have expanded.

This evolving basket ensures the CPI (and related data like wage indexation and welfare adjustments) stays relevant. For instance, if streaming subscriptions jump in price but DVDs disappear from household budgets, the CPI will capture this shift and report a more accurate cost of living change.

How the Basket of Goods Impacts Your Finances

When the ABS releases CPI figures each quarter, those numbers ripple through the economy. Here’s how the basket of goods influences everyday Australians in 2025:

• Wage negotiations: Many enterprise agreements use CPI-linked pay rises, so a jump in the basket’s cost can mean bigger pay packets.

• Government payments: Age Pension, JobSeeker, and Family Tax Benefits are indexed to CPI, so updates to the basket flow through to welfare increases.

• Interest rates: The Reserve Bank of Australia (RBA) watches CPI closely to help set interest rates, which in turn affect mortgage repayments, loan costs, and savings returns.

• Budgeting: Households can use the basket’s breakdown to benchmark their own spending and spot areas where price rises hit hardest.

For example, if the 2025 basket shows transport costs surging due to higher fuel and e-vehicle charging prices, you might rethink your commuting options or look at carpooling apps now included in the basket.

Looking Ahead: The Basket as a Mirror of Australian Life

The basket of goods is more than a statistical tool — it’s a snapshot of how we live, shop, and prioritise. In 2025, its evolution reflects a society that’s greener, more digital, and more health-conscious. Keeping an eye on what’s in (and out of) the basket helps Australians understand the forces behind their rising bills and make smarter financial decisions.