Cost of living - how will the average family cope?

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Brace yourself for even more cost of living increases as groceries, electricity, gas, water and even council rates keep skyrocketing.

With groceries estimated to have risen by up to 16% in recent years and electricity prices set to rise as much as 17% next year, it's clear the average family is going to be hit.

Families will be paying hundreds of dollars more just for basic necessities. Electricity alone could cost up to $300 more.

A number of factors are driving the cost-of-living increases. Increasing energy and commodity prices as the world economy slowly emerges from the global financial crisis are part of the picture.

Then you have the federal government's move to impose a carbon tax. Any compensation the government proposes will soon be eroded by further increases in the carbon tax over time.

The occasional natural disaster will add to the financial burden in the short term, but increases from tax hikes across all levels of government last longer.

On top of all that we have a highly concentrated supermarket sector where Coles and Woolworths are so dominant they can push up prices at will. Reductions on selected items are simply gimmicks as other grocery or petrol prices can be raised to offset the cuts.

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