The cost-of-living crisis and alcohol and other drugs in Australia

The cost of living is increasing for many Australians.

But what affect does this have on drinking and use of other drugs?

Here we look at the impacts, and where to seek support if you or a loved one are affected.

Cost-of-living crisis explained

Australians are paying more for goods, like food and household items, as well as health care, insurance and transport services.¹

Inflation (where costs for the same product or service increase over time) is currently at 5.4% in Australia.²

This is much higher than usual as governments aim to keep inflation at 2 to 3%.³

Inflation reached a peak of 8.4% in December 2022.²

And, the Reserve Bank of Australia (RBA) responded by raising interest rates in stages by 4%.³ This means home loan repayments and rents for many people have also increased, and borrowing money is more costly, which can slow business growth.

Interest rate rises are designed to decrease spending, which should ease inflation.

But right now, inflation is also being driven by supply issues, including:

• COVID-19 pandemic’s impacts on supply chains
• disruptions caused by Russia’s invasion of Ukraine.^4,5
• some companies have been price gouging, further driving up costs.

This means inflation isn’t responding in the way many would like.

Over time, however, the recent interest rate increases should reduce our spending, leading to lower inflation and slower economic growth.

And, this slowdown means the unemployment rate is expected to rise over coming years.^3,6

How the economy impacts alcohol and drug use in Australia

Financial strain can impact people differently.

It may lead to some people using less alcohol, tobacco and other drugs because of tighter budgets.

While others may increase their drinking or drug use to cope with the associated psychological distress and worry.^7,8

In the UK, the cost-of-living crisis has resulted in more people saying cost was their motivation to reduce drinking. But overall, the number of people trying to reduce their drinking has remained the same.⁹

Men are more likely to experience harms from drinking in response to economic crises, including:

• alcohol dependence
• binge or hazardous drinking.⁸

And young men who experience longer periods of unemployment can be at higher risk of drug dependence and related problems.¹⁰

Lower household income has also been associated with more drug-related deaths in the US.¹¹

Financial instability can significantly impact people’s mental health, leading to a higher risk of alcohol or other drug use to manage symptoms.^10,12

Even the anticipation of an economic shock can be harmful for people, increasing the likelihood of drinking to cope with stress.⁷

What were the impacts of past economic crises on alcohol and other drug use?

In America there was an overall decline in drinking during the 2008 recession - but binge drinking increased in some groups, including:

• young people
• men
• unemployed people
• those with lower levels of education.¹³

In Europe, the 2008 economic crises led to a decrease in drinking and smoking - but other drug use increased.10 This may be because illicit drug prices dropped in the US and Europe in the wake of the crises.^10,14

In Hungary, declining government spending following the crisis meant cuts to harm reduction and treatment services, further disadvantaging people who use drugs.^12,15

What’s happening in Australia when it comes to the cost-of-living crisis?

We’re yet to understand the full impact of the cost-of-living crisis on alcohol and other drug use in Australia.

But we do know spending on alcohol and tobacco is changing.

National expenditure decreased in March and April, but increased in May 2023.¹⁶

This varies across states and territories.

For example, spending on alcohol and tobacco increased by 4.1% in QLD in 2023, but decreased by 4.6% in Victoria.¹⁶

Australia is also still recovering from the impact of the COVID-19 pandemic, which led to reductions in alcohol and other drug treatment access due to restrictions.¹⁷

While economic downturn may lead to declines in overall drinking, some vulnerable groups, including young people and those unemployed, are at risk of increased alcohol and other drug harm.

To get help and support for yourself or a loved one, see the resources below.

Help and support

If you’re experiencing financial difficulties, there are help and support services available:

• National Debt Helpline: 1800 007 007
• Small Business Debt Helpline: 1800 413 828
• The Salvation Army: 13 72 58
• St Vincent de Paul Society: 13 18 12
• Mob Strong Debt Help: 1800 808 488
• Services Australia: 132 850
• Ask Izzy

For support with alcohol or other drugs, call or visit:

• National Alcohol and Other Drug Hotline: 1800 250 015
• Path2Help
• Family Drug Support (NSW, QLD, NT, ACT): 1300 368 186
• Family Drug Help (VIC, TAS, SA): 1300 660 068

For mental health support, call:

• Lifeline: 13 11 14
• Suicide call back service: 1300 659 467
• Beyond Blue: 1300 224 636