A $100,000 salary in January 2021 needs to be $126,725 today to buy the same groceries, pay the same rent, and fill the same fuel tank. Prices have risen 26.7% since then, and most Australian workers have not had a 27% pay rise in that time.
The question isn't whether you got a raise. It's whether you got a real raise — one that actually beat inflation. Here is how to calculate the exact dollar gap at your income, what the 2024 tax cut restored, and what the ABS data says about whether your industry is keeping up.
The five-year inflation hit: year by year
Here is how ABS All Groups CPI (catalogue 6401.0) compounded across each calendar year since January 2021. The "salary needed" column shows what a $100,000 salary in January 2021 requires at each milestone to keep the same purchasing power:
| Year | CPI rate | $100k salary needed | Cumulative gap |
|---|---|---|---|
| 2021 | 3.5% | $103,500 | $3,500 |
| 2022 | 7.8% | $111,573 | $11,573 |
| 2023 | 4.1% | $116,147 | $16,147 |
| 2024 | 2.4% | $118,935 | $18,935 |
| 2025 | 3.8% | $123,455 | $23,455 |
| Aug 2026 | 4.0% (year to August) | $126,725 | $26,725 |
The damage accelerated in 2022 (7.8%, the post-COVID supply-chain peak) and has not slowed enough since. After the 2024 low of 2.4%, CPI rose to 4.6% in the year to March 2026, eased to 3.5% by July, and was back at 4.0% in the year to August. Housing (up 5.7%) and transport (up 5.6%, mostly fuel) were the largest contributors (ABS, 30 September 2026). The 2026 row counts the eight months to August at that 4.0% rate.
Enter your salary and the date of your last pay rise — the calculator compounds CPI across every year in between and shows your real income loss in 30 seconds.
Open Pay Rise CalculatorWage growth vs CPI: the ABS says you're still losing
The ABS Wage Price Index (WPI, catalogue 6345.0) measures how much employers are paying per hour of labour. It rose 3.2% in the year to the June quarter 2026. CPI rose 3.8% in the year to June 2026.
That is a 0.6 percentage point real-wage cut over the year. From January 2021 to June 2026, wages rose about 19% while prices rose about 26%, a gap of about 6 percentage points. The average Australian worker buys less today than in early 2021, even after several pay rises.
Wage growth differs by industry. The ABS publishes WPI for each industry every quarter in catalogue 6345.0; check yours before you negotiate.
What the 2024 tax cut actually restored
The income tax brackets that took effect 1 July 2024 reduced income tax at every level above $18,200. Here is the annual saving by income, and how much of the inflation gap it closes:
| Income | Annual tax saving | Inflation gap (Jan 2021 → Aug 2026) | % restored |
|---|---|---|---|
| $45,000 | $804 | $12,026 | 7% |
| $80,000 | $1,679 | $21,380 | 8% |
| $100,000 | $2,179 | $26,725 | 8% |
| $135,000 | $3,729 | $36,079 | 10% |
| $190,000+ | $4,529 (max) | $50,778 | 9% |
The tax cut helps, but it restores only 7-10% of the gap. For a $100k earner, that's $2,179 restored out of a $26,725 hole. The other 92% needs to come from an actual pay rise.
Watch the $105k threshold trap: if your pay rise pushes you across $105,000 (the 2026–27 single threshold; it was $101,000 in 2025–26) and you don't hold private hospital cover, the Medicare Levy Surcharge applies at 1% of your whole income for MLS purposes, adding at least $1,050 a year on top of normal tax. A $10,000 pay rise from $98k to $108k looks like a 10% raise but also brings $1,080 of MLS that wasn't there before. Run your before-and-after with the Velofy Medicare Levy + MLS calculator before you negotiate — it's the difference between a clean pay rise and one that gives money back to the ATO. For the full tier-by-tier breakdown plus Priya's worked example at $108,000 and a Tier 2/3 cost comparison at $244,000, see the 2025–26 Medicare Levy Surcharge guide.
How to ask for an inflation-matching pay rise
Three steps backed by data:
- Calculate your inflation-adjusted salary using the pay rise calculator. That gives you the exact dollar figure you need to be at parity — not a vague "I deserve more" but a verifiable number anchored to ABS data.
- Pull your industry's WPI growth from ABS catalogue 6345.0 and the latest Fair Work annual wage review as comparative benchmarks.
- Frame the request as real-income restoration, not a "raise". Present the year-on-year CPI accumulation alongside any productivity contribution. "I'm asking for restoration to parity, not a premium" is a different negotiation than "I want more money."
Your exact inflation-adjusted target salary, the gap, and the tax-cut offset — in 30 seconds.
Open Pay Rise CalculatorRBA forecast: where inflation goes from here
The RBA's February 2026 Statement on Monetary Policy forecasts CPI at ~4.0% through end-2026, falling to 2.8% by end-2027 and 2.5% by end-2028. On 29 September 2026 the RBA raised the cash rate to 4.60%, saying inflation is still too high. If your employer says "inflation is coming down," they may be right about the trend, but not about the level. Prices don't drop when inflation falls; they just rise slower. The cumulative gap you've already lost is permanent unless you get a raise that closes it.
The pay-rise calculator uses these RBA forecasts to project forward, so you can see what you'd need in 2027 or 2028 if your employer offers a future raise instead of a current one.