There's no sugar-coating it: Inflation is soaring to new highs.
From rising interest rates to increased petrol prices, there are implications for your hip pocket.
But what causes inflation? And who has been hit the hardest?
We've taken a look at your top questions.
What is inflation?
Inflation measures how much more expensive a set of goods and services has become over a certain period of time (usually a year).
The most well-known indicator of this is the Consumer Price Index.
The CPI measures the percentage change in the price of a basket of goods and services consumed by households.
It's calculated by the Australian Bureau of Statistics, which collects prices for thousands of items.
"Every quarter, the ABS calculates the price changes of each item from the previous quarter and aggregates them to work out the inflation rate for the entire CPI basket," the RBA notes.
What causes inflation?
Temporary changes in inflation may be caused by events like supply disruptions or seasonal sales, according to the RBA.
Persistent changes in inflation, however, arise from things like a sustained increase in wage growth across the community.
The RBA "looks through" temporary changes in inflation when setting monetary policy.
Angela Jackson, head economist at Impact Economics, said the current rise in inflation was partly due to a growing global demand for goods as the world came out of pandemic restrictions.
"When demand outstrips supply, issues start to emerge," she said.
Why is inflation so high at the moment?
The inflation rate is expected to hit 7 per cent this year (up from 5.1 per cent currently), but Reserve Bank governor Philip Lowe doesn't see a recession occurring at this stage.
Speaking last week, he said "powerful global factors" were at work.
"The tragic events in Ukraine have led to sharp increases in the prices of food and energy. And interest rates are rising around the world from the record lows during the pandemic," he said.
"All this is happening at a time when unemployment rates are as low as they have been for many decades and household budgets are under pressure.
"So, it is a complex policy environment."
How do rising interest rates help combat inflation?
When the RBA increases interest rates, many people need to cut back on spending and tighten their budgets.
As they rein in spending, companies respond to the fall in consumer demand and drop their prices accordingly.
The RBA will typically keep increasing interest rates until inflation slows down.
Which country has the highest inflation rate?
According to the World Economic Forum, over the past two years inflation rates have doubled in 37 of 44 advanced economies.
But Turkey had by far the highest inflation rate in the first quarter of 2022, at 54.8 per cent.
"Turkey has experienced high inflation for years, but it shot up in late 2021 as the government pursued unorthodox economic policies, such as cutting interest rates rather than raising them," the Pew Research Center noted.
