Australians are living in the most expensive G20 economy in the world. A study by the World Bank shows the costs of goods and services in Australia are elevated around the levels of pricey European countries Switzerland, Norway, Denmark and Sweden.

Overall, Australia ranks as the fourth most expensive economy out of 177 countries measured by the price level index (PLI). It takes into account people’s purchasing power and a country’s exchange rate.

“As the commodity boom and China’s growth slows, Australia will face a more challenging time ahead”: The director of the centre for economic performance at the London School of Economics, John Van Reenen. Credit:Anthony Johnson

Economists believe the major factors that have pushed up local prices are the mining boom, high exchange rate, unbroken economic growth for 22 years, oligopolistic major industries, relatively low unemployment and high labour costs for business.

Kenneth Rogoff, professor of economics at Harvard University, said rich countries were typically at the higher end of the scale and poor countries at the low end.